As filed with the Securities and Exchange Commission on February 15, 2008

File No. 333-148275

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

 

 

 

Amendment No. 1

to

 

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

FIG Acquisition Corp.

(Exact name of Registrant as specified in its charter)

 

 

 

787 Seventh Avenue

6^th Floor

New York, New York 10019

(212) 887-7777

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Peter E. Roth

Chief Executive Officer

787 Seventh Avenue

6^th Floor

New York, New York 10019

(212) 887-7777

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

Copies to:

 

 

 

 

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after this Registration Statement becomes effective.

 

 

 

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED FEBRUARY 15, 2008

Prospectus

$250,000,000

FIG Acquisition Corp.

25,000,000 Units

 

 

FIG Acquisition Corp. is a blank check company recently formed for the purpose of acquiring one or more businesses, or a portion of such business or businesses, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination. We intend to focus initially on businesses in the financial services industry, but we may pursue opportunities in other industries. Our search will be primarily focused on businesses in North America and Europe, but we may explore opportunities in other geographic regions. We do not have any specific business combination under consideration and we have not, nor has anyone on our behalf, contacted, or been contacted by, any prospective target business or had any discussions, formal or otherwise, with respect to a business combination or taken any direct or indirect measures to locate a specific target business or consummate a business combination.

 

We will seek stockholder approval to consummate our initial business combination within the required 24-month period in accordance with the conditions described in this prospectus. If our initial business combination is approved and consummated, public stockholders voting against our initial business combination will be entitled to elect to convert their shares of our common stock into cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, subject to certain limitations described herein.

 

This is an initial public offering of our securities. We are offering 25,000,000 units. Each unit will be offered at a price of $10.00 per unit and will consist of:

 

 

Each warrant entitles the holder to purchase one share of our common stock at a price of $7.50. Each warrant will become exercisable on the later of our consummation of our initial business combination and          , 2009 [one year from the date of this prospectus], and will expire on          , 2013 [five years from the date of this prospectus], unless we redeem the warrants prior to such time, in which case we will have the option to require all holders that wish to exercise their warrants prior to redemption to do so on a cashless basis. If you exercise your warrants on a cashless basis, the number of shares of common stock you will receive upon exercise will be fewer than you would have received if you exercised your warrants for cash.

 

In December 2007, KBW, Inc., our sponsor (NYSE:KBW), purchased 7,187,500 of our units for an aggregate purchase price of $25,000 or approximately $0.003 per unit. Prior to the completion of this offering, our directors and certain executive officers and employees of KBW, Inc. and its subsidiaries will purchase an aggregate of           shares of our common stock from KBW, Inc. Shares of our common stock retained by KBW, Inc. and the shares of our common stock purchased by our directors and certain executive officers and employees of KBW, Inc. and its subsidiaries from KBW, Inc. prior to the completion of this offering will have no right to liquidating distributions in the event we fail to consummate our initial business combination. These holders have agreed that their initial securities will not be sold or transferred, except to permitted transferees, without the prior written consent of Banc of America Securities LLC, until 180 days after we have consummated our initial business combination.

 

KBW, Inc. and certain officers and employees of KBW, Inc. and its subsidiaries have also agreed to purchase an aggregate of 5,500,000 warrants from us at a price of $1.00 per warrant for an aggregate purchase price of $5,500,000 in a private placement immediately prior to the completion of this offering. We refer to these warrants as the private placement warrants. The proceeds from the sale of the private placement warrants will be deposited in the trust account and will be part of the funds distributed to our public stockholders in the event we are unable to complete our initial business combination as described in this prospectus. Those purchasers have also agreed that the private placement warrants will not be sold or transferred, except in limited cases, without the prior written consent of Banc of America Securities LLC, until after we have consummated our initial business combination.

 

We have granted the underwriters a 30-day option to purchase up to 3,750,000 additional units solely to cover over-allotments, if any.

 

There is currently no public market for our units, common stock or warrants. We anticipate that the units will be listed on the American Stock Exchange, or the AMEX, under the symbol FNS.U on or promptly after the date of this prospectus. The shares of common stock and warrants included in the units being sold in this offering will each begin separate trading five business days after the earlier to occur of the expiration of the underwriters’ over-allotment option or the exercise of such option in full by the underwriters. Once such separate trading begins, we anticipate that the shares of common stock and warrants will be listed on the AMEX under the symbols FNS and FNS.WS, respectively. We cannot assure you, however, that our securities will be or will continue to be listed on the AMEX.

 

 

 

 

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 27 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

 

Of the net proceeds we receive from this offering and the proceeds from the sale of the private placement warrants, $245,787,935 (or $281,975,435 if the underwriters’ over-allotment option is exercised in full) will be deposited in a trust account maintained by American Stock Transfer & Trust Company, acting as trustee. The underwriters are not receiving any discounts or commissions with respect to our sale of the private placement warrants.

 

We are offering the units for sale on a firm-commitment basis. Banc of America Securities LLC is acting as the sole book-running manager of this offering. The underwriters expect to deliver the units to investors in this offering on or about          , 2008.

 

Sole Book-Running Manager
Banc of America Securities LLC

 

 

 

The date of this prospectus is          , 2008.

 

TABLE OF CONTENTS

 

 

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different or additional information. If such information is provided to you, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front cover of this prospectus, as our business, financial condition, results of operations and prospects may have changed since that date.

 

PROSPECTUS SUMMARY

	•	references to “we,” “us,” “our,” or “our company” refer to FIG Acquisition Corp.;
	•	references to “KBW” refer to KBW, Inc. and its subsidiaries and affiliates;

	•	the term “employee holders” refers to certain executive officers and employees of KBW, Inc. and its subsidiaries who own any of our initial securities immediately prior to the completion of this offering;

	•	the term “business combination,” as used in this prospectus, means an acquisition by us of one or more businesses, or a portion of such business or businesses, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination;

	•	the term “initial holder” refers to KBW, Inc. as the initial holder of our initial units;

	•	the term “existing holders” refers to KBW, Inc., the employee holders, our directors and all other persons or entities that own any of our initial securities immediately prior to the completion of this offering; and

	•	the term “public stockholder” refers to those holders of shares of common stock included in the units being sold in this offering (whether they are purchased in this offering as units or as units or shares of common stock included in such units in the secondary market), including, to the extent applicable, our existing holders.

	•	Investment Banking:  KBW provides a full range of investment banking services, including mergers and acquisitions and other strategic advisory services, equity and fixed income securities offerings, structured finance and mutual thrift conversions. According to SNL Financial, in the five year period ended December 31, 2007, KBW served as advisor on more financial services mergers and acquisitions than any other firm. During this period, KBW advised on 266 merger and acquisition transactions totaling over $100 billion in deal value and either lead managed or co-managed 146 public equity offerings raising an aggregate of over $80 billion of gross proceeds.

	•	Research:  KBW provides fundamental, objective analysis that identifies investment opportunities and helps clients make better investment decisions. We believe KBW covers more financial services companies in the United States and Europe than any other firm. As of December 31, 2007, KBW’s research department covered an aggregate of 580 financial services companies, including 429 companies in the United States and 151 companies in Europe. Excluding real estate investment trusts, or REITs, on which KBW initiated coverage in September 2007, KBW was ranked first in five of the six categories of its research coverage and second in the remaining category in the 2007 “Best of the Boutiques” survey by Institutional Investor.

	•	Sales and Trading:  As of December 31, 2007, KBW made a market in more than 800 financial services company stocks and fixed income securities, with an emphasis on the small and mid cap segment. KBW’s Sales and Trading team maintains strong relationships with many of the world’s largest institutional investors.

	•	Asset Management:  KBW manages two hedge funds and a private equity fund and also serves as a discretionary sub-advisor for a fund managed by an unaffiliated third party. Investment decisions are based on fundamental research and in — depth industry knowledge.

	•	Experienced management team:  We will seek to effect a business combination with businesses that have strong, experienced management teams. We will focus on management teams with a proven track record of driving revenue growth, enhancing profitability and creating value for their equity owners. We believe that the industry expertise of our executive officers and directors will complement, not replace, the target’s management team. While it is possible that one or more of our executive officers or directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.

	•	Established track records:  We will generally seek to acquire an established business with a history of strong operating and financial performance. However, we may acquire a business that has not performed well in the past, but that we believe is poised for future growth. We do not intend to pursue a business combination with a start-up business.

	•	Potential for earnings and growth:  We will seek to acquire a business that has a history of, or potential for, strong, stable earnings generation. We will focus on businesses that have, or are expected to build, predictable, recurring revenue streams. We may consider businesses in need of refinancing or recapitalization that demonstrate significant potential for strong future financial performance.

	•	Competitive industry position:  Initially, we will seek to acquire a business within financial services sub-sectors that have strong fundamentals. The factors we will consider include growth prospects, competitive dynamics, level of consolidation, need for capital investment and barriers to entry. We will pursue businesses that are well positioned within their respective sub-sectors, focusing on those that have either a leading or defensible niche market position. We will consider businesses with compelling platforms that could benefit from our industry expertise and relationship base.

 

THE OFFERING

Securities offered:		25,000,000 units, at $10.00 per unit, each unit consisting of:
		• one share of our common stock; and
		• one warrant to purchase one share of our common stock.
Trading commencement and separation of common stock and warrants:		The units being sold in this offering will begin trading on or promptly after the date of this prospectus. The common stock and warrants included in these units will begin trading separately five business days (or as soon as practicable thereafter) following the earlier to occur of the expiration of the underwriters’ over-allotment option or the exercise of such option in full, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. However, Banc of America Securities LLC may decide to allow continued trading of the units following such separation, in which case holders of units will be required to have their brokers contact our transfer agent in order to separate their units into common stock and warrants.

		In no event will separate trading of the common stock and warrants included in the units being sold in this offering commence until we have filed an audited balance sheet on a Current Report on Form 8-K reflecting our receipt of the net proceeds of this offering and the proceeds from the sale of the private placement warrants and have issued a press release announcing when separate trading will begin. We will file a Current Report on Form 8-K that includes an audited balance sheet promptly after the closing of this offering, which closing is anticipated to take place four business days after the date of this prospectus. The audited balance sheet will include the net proceeds we receive from the underwriters’ exercise of their over-allotment option if any portion of the over-allotment option is exercised prior to the filing of the first Current Report on Form 8-K and, if any portion of such over-allotment option is exercised by the underwriters after such time, we will file an additional Current Report on Form 8-K that includes a balance sheet reflecting our receipt of the net proceeds from the underwriters’ exercise of their over-allotment option.

		Prior to this				After this
		Offering(1)				Offering(2)
Units			7,187,500				31,250,000
Common stock			7,187,500				31,250,000
Warrants			12,687,500				36,750,000

(1)		Includes an aggregate of 937,500 initial units (or related initial shares and initial warrants) that will be forfeited by KBW, Inc. and the employee holders to the extent that the over-allotment option is not exercised in full by the underwriters.

(2)		Assumes the over-allotment option has not been exercised by the underwriters and an aggregate of 937,500 initial units (or related initial shares and initial warrants) have been forfeited by KBW, Inc. and the employee holders.

Warrants — Exercisability:		Each warrant is exercisable for one share of common stock.
Warrants — Exercise price:		$7.50 per share.
Warrants — Exercise period:		The warrants included in the units being sold in this offering will become exercisable on the later of the consummation of our initial business combination on the terms described in this prospectus and          , 2009, unless the warrants have previously expired, provided that, during the period in which the warrants are exercisable, a registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to the shares of common stock issuable upon exercise of the warrants is available.

		The warrants will expire five years from the date of this prospectus at 5:00 p.m., New York City time, on          , 2013, unless we have redeemed the warrants prior to such time. If we elect to redeem the warrants, we will have the option to require all holders electing to exercise their warrants prior to redemption to do so on a cashless basis. See “— Warrants — Redemption” below.

Warrants — Redemption:		We may redeem the warrants included in the units being sold in this offering at any time after the warrants become exercisable:
		• in whole and not in part;
		• at a price of $0.01 per warrant;
		• upon a minimum of 30 days’ prior written notice of redemption; and
		• only if (x) the closing price of our common stock on the AMEX, or other national securities exchange on which our common stock may be traded, equals or exceeds $14.25 per share for any 20 trading days within a 30 trading-day period ending three business days before we send the notice of redemption, (y) a registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective from the date on which we send a redemption notice to and including the redemption date and (z) a current prospectus relating to the shares of common stock issuable upon exercise of the warrants is available from the date on which we send a redemption notice to and including the redemption date.

		We established the last criterion to provide warrant holders with the opportunity to realize a premium to the warrant exercise price prior to the redemption of their warrants, as well as to provide them with a degree of liquidity to cushion the market reaction, if any, to our election to redeem the warrants. If the above conditions are satisfied and we call the warrants for redemption, the warrant holders will then be entitled to exercise their warrants before the date scheduled for redemption. However, there can be no assurance that the price of our common stock will not fall below the $14.25 per share trigger price or the $7.50 per share warrant exercise price after the redemption notice is delivered. We may redeem the outstanding warrants in our sole discretion if the above conditions

		are satisfied, without the consent of the underwriters, our stockholders or any other party.

		If we call the warrants included in the units being sold in this offering for redemption as described above, our management will have the option to require all holders that wish to exercise such warrants to do so on a “cashless basis.” Exercising warrants on a “cashless basis” means that, in lieu of paying the exercise price in cash, the holder would forfeit a number of shares underlying the warrants being exercised with a fair market value (as defined below) equal to the aggregate exercise price and the holder will therefore receive fewer shares than the holder would otherwise have received upon exercise of those warrants. In such cases, assuming a holder elects to exercise all of his, her or its warrants, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants being tendered multiplied by the difference between the exercise price of the warrants and the fair market value by (y) the fair market value and then would receive shares of common stock underlying the non-surrendered warrants. The “fair market value” shall mean the average reported closing price of our common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. The warrants included in the units being sold in this offering may not be settled on a cashless basis unless they have been called for redemption and we have required all such warrants to be settled on that basis.

		For example, in a cashless exercise, assuming there are 100 warrants held by a holder, the fair market value of our common stock is $15.00 per share and the holder elects to exercise all of his, her or its warrants, the holder would pay the exercise price of $7.50 per share of common stock by surrendering a number of warrants calculated as follows:

		No fractional shares of common stock will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of common stock to be issued to the warrant holder.

Initial securities:		On December 13, 2007, KBW, Inc. purchased 7,187,500 of our units from us for an aggregate purchase price of $25,000 in cash, or approximately $0.003 per unit, in a private placement. Prior to the completion of this offering, the employee holders and our directors will purchase an aggregate of          shares of our common stock from KBW, Inc. at cost. Each unit so purchased by KBW, Inc. consists of one share of common stock and one warrant to purchase one share of common stock. Throughout this prospectus, we refer to the shares of common stock included in the units originally purchased by KBW, Inc. on December 13, 2007 (whether or not then owned by KBW, Inc.) as the initial shares and we refer to the warrants included in the units originally purchased by KBW, Inc. on December 13, 2007 as the initial warrants. Immediately after the sale of such shares of common stock to the employee holders and our directors, KBW, Inc. will own directly of the initial shares and 7,187,500 initial warrants. We refer throughout this prospectus to the initial units, the initial shares and the initial warrants as the initial securities. The initial units and related components are identical to the units being sold in this offering and related components, except that:

		• the existing holders are subject to the transfer restrictions described below;
		• the initial units are immediately separable into initial shares and initial warrants;

		• the existing holders have agreed to vote their initial shares in the same manner as a majority of the shares of our common stock are voted by our public stockholders (excluding our executive officers, directors and existing holders with respect to any units that they purchase in this offering or any units or shares of common stock included in such units that they purchase in the secondary market) in the votes required to approve our initial business combination and the amendment to our certificate of incorporation to provide for our perpetual existence and, as a result, will not be entitled to conversion rights (as described below) with respect to their initial shares;

		• the existing holders have agreed to waive their rights to participate in any liquidating distribution with respect to their initial shares if we fail to consummate our initial business combination;

		• the initial warrants will not be redeemable by us;

		• the initial warrants will become exercisable upon the later of (i) the date that is one year after the date of this prospectus and (ii) the consummation of our initial business combination, in each case, if (x) the closing price of our common stock

		equals or exceeds $14.25 per share for any 20 trading days within a 30 trading-day period beginning 90 days after the consummation of our initial business combination and (y) there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants included in the units being sold in this offering and a current prospectus relating to the shares of common stock issuable upon exercise of such warrants; and

		• the initial warrants will be exercisable at the option of the holder on a cashless basis so long as they are held by the existing holders or their permitted transferees.

		Of the 7,187,500 initial units, 937,500 units (or related initial shares and initial warrants) will be forfeited by KBW, Inc. and the employee holders to us to the extent that the underwriters do not exercise their over-allotment option. If the underwriters exercise their over-allotment option in part, then the number of initial units (or related initial shares and initial warrants) that will be forfeited to us will be in the same proportion as the portion of the over-allotment option that is not exercised by the underwriters. After giving effect to such forfeiture and assuming no purchase of additional units in this offering, the initial shares owned by our existing holders will represent 20% of the total number of shares of our common stock outstanding after completion of this offering. If we determine that the size of the offering should be increased or decreased from the size set forth in this prospectus, a stock dividend, a reverse stock split or other adjustment, as applicable, would be effectuated in order to maintain our existing holders’ ownership percentage at 20% of the total number of shares of our common stock outstanding upon completion of this offering.

		Pursuant to a registration rights agreement between us and the existing holders, the holders of each of our initial units, initial shares and initial warrants (including the shares of common stock to be issued upon exercise of the initial warrants) will be entitled to certain registration rights commencing 180 days after the consummation of our initial business combination.

		The existing holders have agreed, subject to certain exceptions described below, not to sell or otherwise transfer any of their initial units, initial shares or initial warrants (including the shares of common stock to be issued upon exercise of the initial warrants), without the prior written consent of Banc of America Securities LLC, until 180 days after the date of the consummation of our initial business combination, unless, subsequent to our initial business combination, (i) the closing price of our common stock equals or exceeds $14.25 per share for any 20 trading days within any 30 trading-day period or (ii) we consummate a merger, capital stock exchange, stock purchase, asset acquisition or other similar transaction which results in all of our stockholders having the right to exchange their shares of our common stock for cash, securities or other property.

		Notwithstanding the foregoing, the existing holders will be permitted to transfer their initial units, initial shares or initial warrants (including the shares of common stock to be issued upon exercise of the initial warrants) to permitted transferees who agree in writing to be bound to the transfer restrictions, agree to vote their initial shares in the same manner that the majority of the shares of our common stock are voted by our public stockholders (excluding our executive officers, directors and existing holders with respect to any units that they purchase in this offering or any units or shares of common stock included in such units that they purchase in the secondary market) in the votes required to approve our initial business combination and the amendment to our certificate of incorporation to provide for our perpetual existence and waive any rights to participate in any liquidating distribution with respect to their initial shares if we fail to consummate our initial business combination. For so long as the initial units, initial shares or initial warrants (including the shares of common stock to be issued upon exercise of the initial warrants) are subject to transfer restrictions, they will be held in an escrow account maintained by American Stock Transfer & Trust Company.

		Our executive officers, directors and existing holders have agreed to vote all shares of common stock purchased by them in this offering or in the secondary market (including shares of common stock included in any units so purchased) in favor of our initial business combination and the related amendment to our certificate of incorporation to provide for our perpetual existence.

		Permitted transferees of a holder means:
		• immediate family members of the holder and trusts established by the holder for estate planning purposes and transferees by will or the laws of descent;

		• KBW and current and former officers, directors, members and employees of KBW;

		• affiliates of the holder;

		• charitable organizations;

		• our executive officers and directors; and

		• transferees pursuant to a qualified domestic relations order.

Private placement warrants purchased through private placement:		KBW, Inc. and the employee holders have agreed to purchase an aggregate of 5,500,000 private placement warrants from us at a price of $1.00 per warrant for an aggregate purchase price of $5,500,000 in a private placement immediately prior to the completion of this offering.

		The proceeds from the sale of the private placement warrants will be added to the net proceeds of this offering and the aggregate of such proceeds, other than $250,000 which will be used for our working capital, will be held in the trust account pending consummation of our initial business combination on the terms described in this prospectus. If we do not consummate a business

		combination that meets the criteria described in this prospectus, then the proceeds from the sale of the private placement warrants will become part of any liquidating distribution to our public stockholders following our liquidation and dissolution.

		The private placement warrants to be purchased will be identical to the warrants included in the units being sold in this offering, except that the private placement warrants (i) will be exercisable at the option of the holder on a cashless basis so long as they are held by the original purchaser or its permitted transferees and (ii) are not subject to redemption by us. If the private placement warrants are exercised on a cashless basis, the number of shares of common stock issuable upon such exercise will be determined as provided above under “— Warrants — Redemption.” The private placement warrants will not be exercisable at any time when a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective or a current prospectus is not available.

		KBW, Inc. and the employee holders have agreed, subject to certain exceptions described below, not to transfer or sell any of the private placement warrants without the prior written consent of Banc of America Securities LLC, until after we have consummated our initial business combination; provided, however, that transfers may be made to permitted transferees who agree in writing to be bound by such transfer restrictions. In addition, KBW, Inc. and the employee holders and their permitted transferees will be permitted to transfer their private placement warrants in the event of a merger, capital stock exchange, stock purchase, asset acquisition or other similar transaction which results in all of our stockholders having the right to exchange their shares of our common stock or other securities for cash, securities or other property subsequent to our consummation of our initial business combination. For so long as the private placement warrants are subject to transfer restrictions, they will be held in an escrow account maintained by American Stock Transfer & Trust Company.

		Pursuant to the registration rights agreement, the holders of our private placement warrants (including the shares of common stock issuable upon exercise of those warrants) will be entitled to certain registration rights after the consummation of our initial business combination.

Proposed AMEX symbols for our securities:
Units:		FNS.U
Common Stock:		FNS
Warrants:		FNS.WS
Offering proceeds to be held in the trust account:		$245,787,935 of the net proceeds from this offering and the proceeds from the sale of the private placement warrants (approximately $9.83 per unit), or $281,975,435 (or approximately $9.81 per unit if the underwriters’ over-allotment option is exercised in full), will be placed

		in a trust account maintained by American Stock Transfer & Trust Company, acting as trustee, pursuant to an agreement to be signed prior to the date of this prospectus. Of the proceeds held in the trust account, $8,750,000 (or $10,062,500 if the underwriters’ over-allotment option is exercised in full) representing deferred underwriting discounts and commissions will be paid to the underwriters upon consummation of our initial business combination (subject to a $0.35 per share reduction for public stockholders who both vote against our initial business combination that was approved and consummated and exercise their conversion rights as described below). The proceeds held in the trust account will not be released until the earlier of (x) the consummation of our initial business combination on the terms described in this prospectus or (y) our liquidation, but the following amounts may be released to us from the trust account prior to such time: (i) interest income earned on the trust account balance to pay any income taxes on such interest; and (ii) interest income earned, after taxes payable, on the trust account of up to $3,250,000 (subject to adjustment in the case of an increase in the size of this offering or if the underwriters exercise their over-allotment option), to fund our working capital requirements, including, in such an event, the costs of our liquidation. See “Use of Proceeds.” All remaining proceeds held in the trust account, including interest income earned, after taxes payable, on the trust account, will be available for our use in consummating our initial business combination and for payment of the deferred underwriting discounts and commissions or will be released to public stockholders upon their exercise of conversion rights or released to public stockholders entitled to receive liquidating distributions upon our liquidation. Accordingly, unless and until our initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or any expenses which we may incur related to the investigation and selection of a target business or the negotiation of an agreement to consummate our initial business combination, including to make a down payment or deposit or fund a lock-up or “no-shop” provision with respect to a potential business combination, except from the $250,000 of net proceeds from this offering not held in the trust account and interest income earned, after taxes payable, on the trust account of up to $3,250,000, subject to adjustment as described above. We may not use all of the funds then in the trust account in connection with our initial business combination, in which case any such unused funds will constitute working capital for our business after consummation of such business combination.

		The funds in the trust account may be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, which we refer to as the Investment Company Act, having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act.

Escrow of the securities of our existing holders:		Upon completion of this offering, our existing holders and holders of the private placement warrants will place the securities of ours

		that they own prior to the completion of this offering, including the initial securities and the private placement warrants, into an escrow account maintained by American Stock Transfer & Trust Company, acting as escrow agent pursuant to an escrow agreement. These securities will not be transferable during the escrow period (as defined below), except for transfers to permitted transferees and subject to other limited exceptions. Any securities held by these transferees would remain subject to the escrow agreement. The initial securities will not be released from escrow until 180 days following our initial business combination, and the private placement warrants will not be released from escrow until the consummation of our initial business combination, each of which we refer to as an escrow period, unless (i) we were to complete a transaction after the consummation of our initial business combination which results in all of the stockholders of the combined entity having the right to exchange their shares of our common stock for cash, securities or other property or, (ii) in the case of the initial securities, the closing price of our common stock equals or exceeds $14.25 per share for any 20 trading days within any 30 trading day period subsequent to our initial business combination

Payments to our executive officers, directors and existing holders:		There will be no compensation, fees or other payments paid to our executive officers, directors or existing holders or any of their respective affiliates prior to, or for any services they render in order to effectuate the consummation of, our initial business combination other than:
		• repayment of a $200,000 interest-free loan made by KBW, Inc. to cover expenses relating to the offering contemplated by this prospectus;
		• payment to KBW, Inc. of a monthly fee of $10,000 for general and administrative services, including office space, utilities, and secretarial support from the completion of this offering until the earlier of our consummation of a business combination or our liquidation. We believe that, based on rents and fees for similar services in the City of New York, the fees charged by KBW, Inc. are at least as favorable as we could have obtained from unaffiliated third parties; and

		• reimbursement of out-of-pocket expenses incurred by our executive officers and directors and employees of KBW in connection with activities on our behalf, such as identifying and investigating target businesses for our initial business combination.

Conditions to consummating our initial business combination:		Our initial business combination must occur with one or more target businesses or a portion of such business or businesses that have a fair market value, individually or collectively, of at least 80% of the balance in the trust account (excluding deferred underwriting discounts and commissions of $8,750,000 (or $10,062,500 if the underwriters’ over-allotment option is exercised

		in full and after taxes payable)) at the time of such business combination. We will not consider any initial business combination that does not meet such criteria. Pursuant to our certificate of incorporation, any choice of a target business must be approved by a majority vote of our disinterested directors, in addition to obtaining the requisite stockholder approvals described herein.

The stockholders must approve our initial business combination:		Pursuant to our certificate of incorporation, we will seek stockholder approval to consummate our initial business combination, even if the nature of the acquisition would not ordinarily require stockholder approval under applicable state law. We view this requirement as an obligation to our stockholders and neither we nor any of our executive officers or directors will recommend or take any action to amend or waive this provision in our certificate of incorporation. In connection with any vote required for our initial business combination, our existing holders have agreed to vote all of the shares of common stock owned by them prior to the completion of this offering with respect to our initial business combination and the related amendment to our certificate of incorporation to provide for our perpetual existence in the same manner that the majority of the shares of our common stock are voted by our public stockholders (excluding our executive officers, directors and existing holders with respect to any units that they purchase in this offering or any units or shares of common stock included in such units that they purchase in the secondary market) and, as a result, will not be entitled to any conversion rights. In addition, our executive officers, directors and existing holders have agreed that if they acquire shares of common stock in or following the completion of this offering (including the shares of common stock included in any units so acquired) they will vote all such acquired shares in favor of our initial business combination and the related amendment to our certificate of incorporation to provide for our perpetual existence. As a result, they will also not be entitled to any conversion rights attributable to their shares of our common stock acquired in or following the completion of this offering. We will proceed with our initial business combination only if:

		• a majority of the shares of our common stock voted by the public stockholders are voted in favor of the initial business combination;

		• public stockholders owning up to one share less than 30% of the shares of common stock included in the units being sold in this offering both vote against our initial business combination and exercise their conversion rights as described below; and
		• a majority of all of our outstanding shares of common stock are voted in favor of an amendment to our certificate of incorporation to provide for our perpetual existence as described below.
		It is our intention to structure and consummate a business combination in which public stockholders owning up to one share

		less than 30% of the total number of shares of common stock included in the units being sold in this offering may exercise their conversion rights and the business combination would still go forward and be consummated. We may not amend or waive this 30% threshold without the unanimous vote of the holders of our outstanding shares of common stock. We view this threshold, which is set forth in our certificate of incorporation, as an obligation to our stockholders and neither we nor our executive officers or directors will recommend or take any action to lower this 30% threshold or waive this requirement.

Conversion rights for public stockholders voting to reject our initial business combination:		Public stockholders voting against our initial business combination will be entitled to elect to convert their shares of our common stock into cash equal to their pro rata share of the aggregate amount then on deposit in the trust account (including the amount held in the trust account representing the deferred portion of the underwriting discounts and commissions) (initially approximately $9.83 per share, or approximately $9.81 per share if the underwriters’ over-allotment option is exercised in full), including any interest income earned on their pro rata share (after taxes payable on such interest income and after release of up to $3,250,000, subject to adjustment, of interest income earned, after taxes payable, to fund working capital requirements), only if our initial business combination is approved and consummated. Public stockholders who convert their shares of our common stock into a pro rata share of the trust account will continue to have the right to exercise any warrants they may hold. Our executive officers, directors and existing holders will not be entitled to any conversion rights with respect to shares of our common stock held by them prior to the completion of this offering or with respect to any units purchased in this offering or any units or shares of common stock included in such units in the secondary market. Exercise of conversion rights by public stockholders would have the effect of reducing the amount distributed to us from the trust account by up to approximately $73,736,371 (assuming conversion of one share less than the 30% threshold (i.e., 7,499,999 shares of our common stock)) (or up to approximately $84,592,621 if the underwriters’ over-allotment option is exercised in full). We intend to structure and consummate any potential business combination in a manner such that our public stockholders holding up to 7,499,999 of our shares of common stock voting against our initial business combination could convert their shares to cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, and such business combination could still go forward.

		Notwithstanding the foregoing, a public stockholder, together with any affiliate or any other person with whom the public stockholder is acting in concert or as a “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act), will be restricted from seeking conversion rights with respect to more than

		10% of the shares of common stock included in the units being sold in this offering. Such a public stockholder would still be entitled to vote against a proposed business combination with respect to all shares owned by him, her or it. We believe this restriction will prevent stockholders from accumulating large blocks of common stock before the vote held to approve a proposed business combination and attempting to use their conversion rights as a means to force us or our management to purchase their stock at a significant premium to the then-current market price. Absent this provision, for example, a public stockholder who owns 15% of the shares of common stock included in the units being sold in this offering could threaten to vote against a proposed business combination and seek conversion, regardless of the merits of the transaction, if the shares are not purchased by us or our management at a premium to the then-current market price. By limiting each public stockholder’s ability to convert only up to 10% of the shares of common stock included in the units being sold in this offering, we believe we have limited the ability of a small group of public stockholders to unreasonably attempt to block a transaction which is favored by our other public stockholders. However, as previously stated, we are not restricting the public stockholders’ ability to vote any or all of their shares against the proposed business combination.

		An eligible stockholder may request conversion at any time after the mailing to our stockholders of the proxy statement and no later than the business day immediately preceding the vote taken with respect to a proposed business combination at a meeting held for that purpose, but the request will not be granted unless the stockholder votes against the initial business combination and the initial business combination is approved and consummated. In addition, at our option, we may require that, no later than the business day immediately preceding the vote on the business combination, the eligible stockholder must present written instructions to our transfer agent stating that the stockholder wishes to convert the shares of our common stock held by such stockholder into a pro rata share of the trust account and confirming that the stockholder has held those shares since the record date and will continue to hold them through the stockholder meeting and the closing of our initial business combination. We may also require eligible stockholders to tender their certificates to our transfer agent or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System no later than the business day immediately preceding the vote on the business combination. Traditionally, in contrast to the requirement for physical or electronic delivery of shares of common stock prior to the stockholder meeting, in order to perfect conversion rights in connection with a blank check company’s initial business combination, a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his, her or its conversion rights. If the business combination was approved, the company

		would contact such stockholder to arrange for delivery of his, her or its stock certificate to verify ownership. As a result, the stockholder had, in effect, an “option window” after the approval of the business combination during which the stockholder could monitor the price of the Company’s common stock in the market. If the price rose above the conversion value, the stockholder could sell his, her or its shares in the open market instead of actually delivering shares to the company for cancellation in consideration for the conversion value. Thus, the company would not have any ability to enforce the exercise of conversion rights effected at the time the business combination was approved, and the conversion rights would eventually be continuing rights surviving beyond the approval of the business combination until the converting holder delivered the stock certificate for conversion at the conversion value. The requirement for physical or electronic delivery of shares of common stock prior to the stockholder meeting serves two purposes. First, it ensures that a stockholder’s election to exercise his, her or its conversion rights is irrevocable once the business combination is approved. Second, it ensures that we know the amount of proceeds that we will be able to use to consummate the business combination prior to the consummation of the business combination. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker approximately $35 and it would be up to the broker whether or not to pass this cost on to the converting stockholder.

		The proxy soliciting materials that we will furnish to stockholders in connection with the vote for any proposed business combination will indicate whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, stockholders will have from the time we send out our proxy statement up until the business day immediately preceding the vote on the business combination to deliver their shares if they elect to exercise their conversion rights. This time period varies depending on the specific facts of each transaction. However, because the delivery process is within the stockholder’s control and, so long as the stockholder holds the securities in “street name” through a broker-dealer (rather than holding physical certificates registered in the stockholder’s name) and delivers those securities electronically, we believe that delivery can usually be accomplished by the stockholder in a relatively short time period simply by contacting the transfer agent or tendering broker and requesting delivery of the shares through the DWAC System and that this time period is sufficient for investors generally. However, because we do not have any control over the delivery process, it may take significantly longer than we anticipate and stockholders may not be able to exercise their conversion rights in time. In particular, delivery of physical certificates usually takes considerably longer than electronic delivery. Accordingly, we will only require stockholders to deliver their certificates prior to the vote if, in accordance with the AMEX’s proxy notification recommendations, the stockholders

		receive the proxy soliciting materials at least 20 days prior to the meeting. See “Risk Factors — Risks Relating to the Company and the Offering — We may require public stockholders who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.”

		Any request for conversion, once made, may be withdrawn at any time prior to the vote taken with respect to a proposed business combination at the meeting held for that purpose. Furthermore, if a stockholder delivers a certificate for conversion and subsequently withdraws the request for conversion, the stockholder may simply request that the transfer agent return the certificate (physically or electronically).

		If a vote on our initial business combination is held and the business combination is not approved, we may continue to try to consummate a business combination with a different target business until 24 months from the completion of this offering. If our initial business combination is not approved or consummated for any reason within the required 24-month period, then public stockholders voting against our initial business combination who exercised their conversion rights would not be entitled to convert their shares of common stock for a pro rata share of the aggregate amount then on deposit in the trust account. In such a case, if we have required public stockholders to tender their shares prior to the stockholders’ meeting, we will promptly return such shares to the tendering public stockholder.

		Voting against the initial business combination alone will not result in an election to exercise a stockholder’s conversion rights. A stockholder must also affirmatively exercise such conversion rights no later than the business day immediately preceding the vote taken with respect to the proposed initial business combination.

Certificate of Incorporation:		As discussed below, there are specific provisions in our certificate of incorporation that may be amended only by the unanimous consent of our stockholders prior to the consummation of our initial business combination, including our requirements to seek stockholder approval of such a business combination and to allow our stockholders to seek conversion of their shares in accordance with the conditions specified in this prospectus if they vote against such a business combination. While we have been advised that such provisions limiting our ability to amend our certificate of incorporation may not be enforceable under applicable Delaware law, we view these provisions of our certificate of incorporation as obligations to our stockholders and our executive officers and directors have agreed that they will not recommend or take any action to amend or waive these provisions.

		Our certificate of incorporation also provides that we will continue in existence only until          , 2010. If we have not consummated our initial business combination by such date, our corporate existence will automatically cease except for the

		purposes of winding up our affairs and liquidating pursuant to Section 278 of the Delaware General Corporation Law. This has the same effect as if our board of directors and stockholders had formally voted to approve our liquidation pursuant to Section 275 of the Delaware General Corporation Law. Accordingly, limiting our corporate existence to a specified date as permitted by Section 102(b)(5) of the Delaware General Corporation Law removes the necessity to comply with the formal procedures set forth in Section 275 (which would have required our board of directors and stockholders to formally vote to approve our liquidation and to have filed a certificate of dissolution with the Delaware Secretary of State). In connection with any proposed initial business combination we submit to our stockholders for approval, we will also submit to stockholders a proposal to amend our certificate of incorporation to provide for our perpetual existence, thereby removing the 24-month limitation on our corporate life. We will only consummate our initial business combination if stockholders vote both in favor of such business combination and our amendment to provide for our perpetual existence. The approval of the proposal to amend our certificate of incorporation to provide for our perpetual existence would require the affirmative vote of a majority of our outstanding shares of common stock. Our executive officers, directors and existing holders have agreed to vote all of the shares of our common stock owned by them prior to this offering (including the shares of common stock included in any initial units) in the same manner that the majority of the shares of common stock are voted by our public stockholders with respect to this amendment and to vote all shares of our common stock purchased by them in this offering or in the secondary market (including the shares of common stock included in any units so purchased) in favor of this amendment. We view this provision terminating our corporate life by , 2010 as an obligation to our stockholders and our executive officers and directors have agreed that they will not recommend or take any action to amend or waive this provision to allow us to survive for a longer period of time except upon the consummation of our initial business combination.

Liquidation if no business combination:		As described above, if we have not consummated our initial business combination by          , 2010, in accordance with our certificate of incorporation, our corporate existence will cease and we will promptly distribute to our public stockholders the amount in our trust account (including any interest income (after taxes payable) then remaining in the trust account) plus any remaining net assets.

		We cannot assure you that the per share distribution from the trust account, if we liquidate, will not be less than approximately $9.83 (or approximately $9.81 if the underwriters’ over-allotment option is exercised in full), plus interest income earned (after taxes payable) on funds then held in the trust account for the following reasons:

		• Prior to liquidation, pursuant to Section 281 of the Delaware General Corporation Law, we will adopt a plan that will provide for our payment, based on facts known to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that may be potentially brought against us within the subsequent 10 years. Accordingly, we would be required to provide for any creditors known to us at that time as well as provide for any claims that we believe could potentially be brought against us within the subsequent 10 years prior to distributing the funds held in the trust to our public stockholders. We cannot assure you that we will properly assess all claims that may be potentially brought against us. In addition, if we underestimate claims that may potentially be brought against us, our stockholders could potentially be liable for any claims of creditors to the extent of distributions received by them (but no more).

		• Prior to consummating our initial business combination, we will seek to have all prospective target businesses with whom we negotiate and all vendors we engage, which we collectively refer to as the “contracted parties,” execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. However, there is no guarantee that they will execute these agreements nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the trust account or that a court would not conclude that such agreements are not legally enforceable. KBW, Inc. has agreed that it will be liable to us if and to the extent claims by third parties reduce the amounts in the trust account available for payment to our public stockholders in the event of our liquidation and the claims are made by one or more of our vendors, by a third party with which we entered into a contractual relationship following consummation of this offering or by a prospective target business. A “vendor” refers to a third party that provides goods or services to us (including providers of any financing). However, the agreement entered into by KBW, Inc. specifically provides for two exceptions to its indemnification obligations: there will be no liability (1) as to any claimed amounts owed to a third party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable), or (2) as to any claims under our indemnity to the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Furthermore, there could be claims from parties other than vendors or target businesses that would not be covered by the indemnity from KBW, Inc., such as stockholders and other claimants who are not parties in contract with us who file a claim for damages against us. We cannot assure you that KBW, Inc. will be able to satisfy its indemnification obligations.

		We expect that all costs associated with implementing our plan of liquidation as well as payments to any creditors will be funded out

		of the $250,000 of the net proceeds of this offering not held in the trust account and the up to $3,250,000, subject to adjustment, of interest income earned, after taxes payable, in the trust account that may be released to us. We estimate that our total costs and expenses for implementing and completing our liquidation will not exceed $125,000. This amount includes all costs and expenses relating to our liquidation and winding up. We believe that there should be sufficient funds available to us for our working capital to fund these costs and expenses from the proceeds not held in the trust account, plus interest income earned, after taxes payable on the trust account, although we cannot give you any assurance that such funds will, in fact, be sufficient for such purposes. If those funds are insufficient, KBW, Inc. has agreed to provide us with the funds necessary to complete our liquidation (currently anticipated not to exceed $125,000).

		For more information regarding the liquidation procedures and the factors that may impair our ability to distribute our assets, including stockholder approval requirements, or cause distributions to be less than approximately $9.83 per share, please see the sections entitled “Risk Factors — Risks Relating to the Company and the Offering — If third parties bring claims against us or if we go bankrupt, the proceeds held in the trust account could be reduced and the per share liquidation price received by our public stockholders could be less than approximately $9.83 per share,” “— Risks Relating to the Company and the Offering — Under Delaware law, the requirements and restrictions relating to this offering contained in our certificate of incorporation may be amended, which could reduce or eliminate the protection afforded to our stockholders by such requirements and restrictions,” “— Risks Relating to the Company and the Offering — Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them in our liquidation. Any liability may extend well beyond the third anniversary of the date of dissolution because we do not intend to comply with the procedures set forth in Section 280 of the Delaware General Corporation Law,” and “Proposed Business — Consummating an Initial Business Combination — Liquidation if No Business Combination.”

Audit Committee:		We have established and will maintain an audit committee which initially will be composed of a majority of independent directors and will be within one year composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled “Management — Committees of the Board of Directors — Audit Committee.”

 

SUMMARY FINANCIAL DATA

		As of December 17, 2007
Balance Sheet Data:		Actual				As Adjusted
Working capital (deficiency)		$	(180,550	)		$	237,312,385
Total assets			410,000				237,312,385
Total liabilities			385,550				—
Value of common stock which may be converted to cash (approximately $9.83 per share)(1)			—				73,736,371
Total stockholders’ equity		$	24,450			$	163,576,014

(1)		If the initial business combination is approved and consummated, public stockholders who voted against the business combination will be entitled to convert their shares of our common stock for cash of approximately $9.83 per share (or up to $73,736,371 in the aggregate), which amount represents approximately $9.48 per share (or up to $71,111,371 in the aggregate) representing the net proceeds of this offering and the proceeds from the sale of the private placement warrants and $0.35 per share (or up to $2,625,000 in the aggregate) representing underwriting discounts and commissions that the underwriters have agreed to defer and deposit into the trust account and to forfeit to pay converting stockholders, and does not take into account interest income earned on and retained in the trust account. The foregoing information assumes no exercise of the underwriters’ over-allotment option.

 

An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to invest in our securities. If any of the following events occur, our business, prospects, financial condition and results of operations may be adversely affected. In that event, the trading price of our securities could decline, and you could lose all or a part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the material risks described below.

 

Risks Relating to the Company and the Offering

 

We are a development stage company with no operating history and, accordingly, you will have no basis upon which to evaluate our ability to achieve our business objective.

 

We are a recently incorporated development stage company with no operating results to date. Therefore, our ability to begin operations is dependent upon obtaining financing through the public offering of our units and the sale of the private placement warrants. Because we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to consummate our initial business combination with one or more businesses or a portion of such business or businesses. We do not have any specific business combination under consideration, and we have neither identified, nor been provided with the identity of, any prospective target businesses. Neither we nor any representative acting on our behalf have had any contacts or discussions, whether formal or informal, with any prospective target business regarding our initial business combination or taken any direct or indirect measures to locate a specific target business or consummate our initial business combination. As a result, you have a limited basis upon which to evaluate whether we will be able to identify an attractive target business. We will not generate any operating revenues until, if at all, after the consummation of our initial business combination. We cannot assure you as to when, or if, our initial business combination will occur.

 

Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”

 

As of December 17, 2007, we had $205,000 in cash and a working capital deficiency of $180,550. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to raise capital and to consummate a business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.

 

We may not be able to consummate our initial business combination within the required time frame, in which case we will be required to liquidate our assets.

 

We must consummate an initial business combination with one or more businesses, or a portion of such business or businesses, with a fair market value, individually or collectively, at least equal to 80% of the balance in the trust account at the time of our initial business combination (less the deferred underwriting discounts and commissions of $8,750,000, or $10,062,500 if the underwriters’ over-allotment option is exercised in full, and taxes payable) within 24 months after the completion of this offering. If we fail to consummate our initial business combination meeting such criteria within the required time frame, in accordance with our certificate of incorporation, our corporate existence will terminate, except for purposes of liquidation and winding up. Because we do not have any specific business combination under consideration and we have neither identified nor been provided with the identity of any specific target business or taken any measures to locate a specific target business or consummate our initial business combination, we may not be able to find a suitable target business or businesses within the required time frame. In addition, our negotiating

position and our ability to conduct adequate due diligence on any potential target business may be reduced as we approach the deadline for the consummation of our initial business combination.

 

If we are required to liquidate without consummating our initial business combination, our public stockholders will receive less than $10.00 per share upon distribution of the funds held in the trust account and our warrants will expire with no value.

 

If we are unable to consummate our initial business combination meeting the criteria described herein within 24 months from the completion of this offering and are required to liquidate, the per share liquidation amount will be less than $10.00 because of the expenses related to this offering, our general and administrative expenses, the anticipated costs associated with seeking our initial business combination, satisfaction of our then outstanding liabilities and costs associated with our liquidation. Furthermore, there will be no distribution with respect to our outstanding warrants, which will expire with no value if we liquidate before the consummation of our initial business combination.

 

While we are not permitted to access funds in the trust account for operating expenses and costs associated with investigating a business combination, up to $3,250,000 (subject to adjustment in the case of an increase in the size of this offering or if the underwriters exercise their over-allotment option), of interest income on the trust balance, after taxes payable, may be released to us to fund our working capital requirements, including the costs of investigating and pursuing a business combination transaction, expenses associated with our liquidation and other miscellaneous items. A liquidating distribution will be no more than approximately $9.83 per share (not including gains on interest, if any, on the trust account and assuming the underwriters do not exercise their over-allotment option) because offering expenses and underwriting discounts and commissions totaling approximately $9,462,065 will be deducted immediately from the gross proceeds of this offering. Furthermore, there will be no distribution with respect to our outstanding warrants, which will expire with no value if we liquidate before the consummation of our initial business combination.

 

If we are unable to consummate our initial business combination, our public stockholders will likely be forced to wait the full 24 months before receiving liquidating distributions.

 

We have 24 months from the completion of this offering in which to consummate our initial business combination meeting the criteria described herein. We have no obligation to return funds in the trust account to investors prior to such date unless we consummate our initial business combination prior thereto and only then to those investors that have both voted against the business combination and requested conversion of their shares in the manner described herein. Only after the expiration of this 24-month period will public stockholders be entitled to liquidating distributions if we are unable to consummate our initial business combination. Accordingly, funds in the trust account will be unavailable to public stockholders until such time.

 

Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a group, will be restricted from seeking conversion rights with respect to more than 10% of the shares of common stock included in the units being sold in this offering.

 

When we seek stockholder approval of our initial business combination, we will offer each public stockholder (excluding our executive officers, directors and existing holders with respect to any units that they purchase in this offering or any units or shares of common stock included in such units that they purchase in the secondary market) the right to have his, her or its shares of common stock converted to cash if the public stockholder votes against the business combination and the business combination is approved and consummated. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his, hers or it or any other person with whom he, she or it is acting in concert or as a group, within the meaning of Section 13(d)(3) of the Exchange Act, will be restricted from seeking conversion rights with respect to more than 10% of the shares of common stock included in the units being sold in this offering. Accordingly, if you purchase more than 10% of the shares of common stock included in the units being sold in this offering, vote all of your shares against a proposed business combination and such proposed business combination is approved and consummated, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold the balance of the shares in excess of 10% of the shares of common stock included in the units being sold in this offering or sell them in the secondary market. We cannot assure

you that the value of the excess shares will appreciate over time following a business combination or that the market price of our common stock will exceed the per share conversion price. Furthermore, this limitation could result in fewer available funds being released from the trust account upon conversion and, as a result, make it easier to fund our initial business combination.

 

The ability of our public stockholders to exercise their conversion rights may not allow us to effectuate the most desirable business combination or optimize our capital structure.

 

When we seek stockholder approval of our initial business combination, we will offer each public stockholder (other than our executive officers, directors and existing holders with respect to any units that they purchase in this offering or any units or shares of common stock included in such units that they purchase in the secondary market) the right to elect to have his, her or its shares of common stock converted to cash if such public stockholder votes against the initial business combination and the initial business combination is approved and consummated, except as specified under “— Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a group, will be restricted from seeking conversion rights with respect to more than 10% of the shares of common stock included in the units being sold in this offering.” As a result, such a public stockholder must both vote against such business combination and exercise his, her or its conversion rights to receive a pro rata portion of the trust account. Accordingly, if our initial business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise their conversion rights until the stockholder vote, we may either need to reserve part of the trust account for possible payment upon such conversion or to arrange third party financing to help fund the acquisition of our initial business combination in case a larger percentage of public stockholders exercise their conversion rights than we expect. Because we have no specific business combination under consideration, we have not taken any steps to secure third party financing. Therefore, we may not be able to consummate our initial business combination if it requires us to use all of the funds held in the trust account as part of the purchase price unless we obtain third party financing, as to which no assurance can be given, and if such financing involves debt, our leverage ratio may not be optimal for our business combination and, if such financing involves the issuance of equity, it may be dilutive to our public stockholders. This may limit our ability to effectuate the most attractive business combination available to us. Additionally, even if our initial business combination does not require us to use substantially all of our cash to pay the purchase price, conversions beyond any expected amount would result in less cash available for ongoing working capital or other needs.

 

A public stockholder who abstains from voting will lose the ability to receive a pro rata share of the funds in the trust account if we consummate our initial business combination.

 

Prior to the consummation of our initial business combination, we will submit the transaction to our stockholders for approval, even if the nature of the business combination is such as would not ordinarily require stockholder approval under applicable Delaware law. If we achieve a quorum for the meeting, only stockholders who exercise their right to vote will affect the outcome of the stockholder vote. Abstentions are not considered to be voting “for” or “against” the transaction. Any public stockholder who abstains from voting would be bound by the decision of the majority of stockholders who do vote. As a result, an abstaining public stockholder will lose the ability to receive a pro rata share of the trust account, including interest income thereon (after taxes payable on such interest income and after release of up to $3,250,000 (subject to adjustment in the case of an increase in the size of this offering or if the underwriters exercise their over-allotment option) of interest income earned, after taxes payable, thereon to fund working capital requirements), which would be available to a public stockholder (other than our executive officers, directors and existing holders) that both votes against our initial business combination and exercises its conversion rights.

 

We may require public stockholders who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.

 

We may require public stockholders who wish to exercise their conversion rights regarding their shares in connection with a proposed business combination to either tender their certificates to our transfer agent or to

deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System no later than the business day immediately preceding the vote taken at the stockholder meeting relating to such business combination. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, The Depository Trust Company and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over the process, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a relatively short time to deliver shares through the DWAC System, we cannot assure you of this fact. If it takes longer than we anticipate for stockholders to deliver their shares, public stockholders who wish to exercise their conversion rights may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares. Accordingly, we will only require stockholders to deliver their certificates prior to the vote if, in accordance with the AMEX’s proxy notification recommendations, stockholders receive the proxy soliciting materials at least 20 days prior to the meeting.

 

We will proceed with our initial business combination even if public stockholders owning in the aggregate less than 30% of the shares of common stock included in the units being sold in this offering exercise their conversion rights. This provision may make it easier for us to have an initial business combination approved over stockholder dissent.

 

We will proceed with our initial business combination even if public stockholders owning in the aggregate less than 30% of the shares of common stock included in the units being sold in this offering exercise their conversion rights. Accordingly, public stockholders owning in the aggregate one share less than 30% of the shares of common stock included in the units being sold in this offering may exercise their conversion rights and we could still consummate a proposed business combination. We have set the conversion percentage at one share less than 30% (rather than the 20% conversion percentage that had until recently been customary in similar offerings) in order to reduce the likelihood that a small group of investors holding a block of our common stock will be able to stop us from completing a business combination that may otherwise be approved by a large majority of our public stockholders. As a result of this change and the restrictions with regard to any stockholder converting more than 10% of the shares of common stock included in the units being sold in this offering, it may be easier for us to consummate a business combination even in the face of a strong stockholder dissent, thereby negating some of the protections of having a lower conversion threshold to public stockholders. Furthermore, the ability to consummate a business combination despite stockholder disapproval in excess of what would be permissible in a traditional blank check offering may be viewed negatively by potential investors seeking stockholder protections consistent with other similar offerings.

 

We may need to raise additional funds in order to consummate our initial business combination and may be unable to arrange financing on favorable terms.

 

Our initial business combination may require us to use substantially all of our cash to pay the purchase price. In such a case, because we will not know how many public stockholders may exercise their conversion rights, we may need to arrange for third party financing to help fund our business combination in case a larger percentage of public stockholders exercise their conversion rights than we expect. Additionally, even if our business combination does not require us to use substantially all of our cash to pay the purchase price, if a significant number of public stockholders exercise their conversion rights, we will have less cash available to use in furthering our business plans following a business combination and may need to arrange third party financing. We have not taken any steps to secure third party financing for either situation, and we cannot assure you that we would be able to obtain such financing on favorable terms, or at all. Further, the United States credit markets have recently experienced significant dislocations and liquidity disruptions which have caused credit spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive and, in certain cases, have resulted in the unavailability of certain types of debt financing. Continued uncertainty in the credit markets may negatively impact our ability to access debt financing on favorable terms, or at all.

You will not be entitled to protections normally afforded to investors of blank check companies.

 

Because the net proceeds of this offering are intended to be used to consummate a business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under U.S. federal securities laws. However, because we expect that our securities will be listed on the AMEX, a national securities exchange, and we will have net tangible assets in excess of $5,000,000 upon the successful completion of this offering and will file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission, which we refer to as the SEC, promptly following the completion of this offering that includes an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419 under the Securities Act. Accordingly, investors will not be afforded the benefits or protections of those rules. Because we are not subject to those rules, including Rule 419, our units will be immediately tradable and we will have a longer period of time to consummate a business combination than we would if we were subject to those rules. For a more detailed comparison of this offering to offerings under Rule 419, see the section entitled “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.”

 

Under Delaware law, the requirements and restrictions relating to this offering contained in our certificate of incorporation may be amended, which could reduce or eliminate the protection afforded to our stockholders by such requirements and restrictions.

 

Our certificate of incorporation contains certain requirements and restrictions relating to this offering that will apply to us until the consummation of our initial business combination. Specifically, our certificate of incorporation provides, among other things, that:

 

 

 

 

Our certificate of incorporation requires that we obtain the unanimous consent of our stockholders to amend certain of the above provisions. However, the validity of unanimous consent provisions under Delaware law has not been settled. A court could conclude that the unanimous consent requirement constitutes a practical prohibition on amendment in violation of the stockholders’ implicit rights to amend the corporate charter. In that case, some or all of the above provisions could be amended without unanimous consent and any such amendment could reduce or eliminate the protection afforded to our stockholders. However, we view the foregoing provisions as obligations to our stockholders and our executive officers and directors have agreed that they will not recommend or take any action to waive or amend any of these provisions that would take effect prior to the consummation of our initial business combination.

 

Because of our limited resources and the significant competition for business combination opportunities, we may not be able to consummate an attractive business combination.

 

Identifying, executing and realizing attractive returns on business combinations is highly competitive and involves a high degree of uncertainty. We expect to encounter intense competition for a potential target business from other entities having a business objective similar to ours, including venture capital funds, leveraged buyout funds, operating businesses and other entities and individuals, both foreign and domestic. Many of these competitors are well established and have extensive experience in identifying and consummating business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do, and our financial resources will be relatively limited when contrasted with those of many of these competitors. Furthermore, over the past several years, other blank check companies have been formed, some of which have similar investment objectives as ours, and a number of such companies have grown in size. Additional investment funds and blank check companies with similar investment objectives as ours may be formed in the future and these funds and companies may have substantially more capital and may have access to and utilize additional financing on more attractive terms. While we believe that there are numerous potential target businesses with which we could combine using the net proceeds of this offering and the proceeds from the sale of the private placement warrants, together with additional financing, if available, our ability to compete in combining with certain sizeable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing a business combination with certain target businesses. In addition:

 

 

 

 

 

 

Any of these factors may place us at a competitive disadvantage in consummating our initial business combination on favorable terms, or at all.

 

To the extent that our initial business combination entails the contemporaneous combination with more than one business or portions of businesses, we may not have sufficient resources, financial or otherwise, to effectively and efficiently conduct adequate due diligence and negotiate definitive agreements on terms most favorable to our stockholders. In addition, because our initial business combination may be with different sellers, we will need to convince such sellers to agree that our purchase of their businesses is contingent upon the simultaneous closings of the other acquisitions.

 

Because there are numerous blank check companies similar to ours seeking to consummate an initial business combination, it may be more difficult for us to consummate our initial business combination.

 

Based upon publicly available information, as of January 31, 2008 approximately 150 similarly structured “blank check” companies have completed initial public offerings in the United States since the start of 2004 and 47 others have filed registration statements. Of the “blank check” companies that have completed initial public offerings, 43 companies have consummated a business combination, while 25 other companies have announced that they have entered into definitive agreements or letters of intent with respect to potential business combinations but have not yet consummated such business combinations. Eight companies have failed to complete previously announced business combinations and have announced their pending dissolution and return of trust proceeds to stockholders. Accordingly, the remaining 74 “blank check” companies that we estimate to have raised approximately $13.5 billion that is currently held in trust accounts, and potentially an additional 47 “blank check” companies that have filed registration statements to raise approximately $10.4 billion, will be seeking to enter into business combinations. Approximately 12 similarly structured blank check companies are focused on the financial services industry and have completed initial public offerings and an additional 8 similarly structured and focused blank check companies have filed registration statements for their initial public offerings. As a result, we may be subject to competition from these and other companies seeking to consummate a business combination which, in turn, will result in an increased demand for target businesses. Further, the fact that 43 “blank check” companies have consummated a business combination, 25 other companies have entered into definitive agreements or letters of intent with respect to potential business combinations, and eight companies have failed to complete a business combination, may be an indication that there are a limited number of attractive target businesses available or that many target businesses may not be inclined to enter into a business combination with a publicly held “blank check” company. Because of this competition, we cannot assure you that we will be able to consummate an initial business combination within the required time periods. If we are unable to find a suitable target business within the required time period, the terms of our certificate of incorporation will require us to liquidate.

 

We may have insufficient resources to cover our operating expenses and the expenses of consummating our initial business combination.

 

We believe that the $250,000 available to us outside of the trust account upon completion of this offering and interest income earned, after taxes payable, of up to $3,250,000 (subject to adjustment in the case of an increase in the size of this offering or if the underwriters exercise their over-allotment option) on the balance of the trust account that we expect to be available to us will be sufficient to cover our working capital requirements for the next 24 months, including expenses incurred in connection with our initial business combination, based upon our executive officers’ estimate of the funds required for these purposes. This estimate may prove inaccurate, especially if a portion of the available proceeds is used to make a down

payment or pay exclusivity or similar fees in connection with our initial business combination or if we expend a significant portion of the available proceeds in pursuit of a business combination that is not consummated. Moreover, a decline in interest rates applicable to amounts included in the trust account could limit the funds available to fund our search, to pay our tax obligations and to complete the initial business combination. See “— A decline in interest rates could limit the funds available to fund our search for a target business or businesses because we will depend on interest income earned on the trust account to fund our search and our working capital requirements and to pay our tax obligations.” If we do not have sufficient proceeds available to cover our expenses, we may be required to obtain additional financing from our executive officers, our directors, our existing holders or third parties. Such additional financing may include loans from third parties or additional sales of our securities, although we currently have no arrangements to obtain any such financing, and no party is under any obligation to make such financing available to us. We would seek to have any third party lenders waive claims to any monies held in the trust account for the benefit of the public stockholders. KBW, Inc. has agreed to indemnify the trust account for claims made by such lenders to the extent that the payment of any debts or obligations owed to such lenders actually reduces the funds in the trust account available for payment to our public stockholders in the event of our liquidation, except that there will be no indemnity as to any claimed amounts owed to a third party who executed a waiver (even if such waiver is subsequently found to be invalid or unenforceable). We may not be able to obtain any additional financing. None of our executive officers, directors, existing holders or any third parties are obligated to provide any additional financing in the amounts needed, or at all, and the terms (including cost) of any financing that is obtained may be unduly burdensome and restrictive. If we do not have sufficient proceeds to fund our initial business combination and are unable to obtain additional financing, we may be required to liquidate prior to consummating our initial business combination.

 

A decline in interest rates could limit the funds available to fund our search for a target business or businesses because we will depend on interest income earned on the trust account to fund our search and our working capital requirements and to pay our tax obligations.

 

Of the net proceeds of this offering and the proceeds from the sale of the private placement warrants, only $250,000 will be available to us initially outside the trust account to fund our working capital requirements. We will depend on sufficient interest income being earned on the proceeds held in the trust account to provide us with additional working capital in order to identify one or more target businesses and to negotiate and obtain approval of our initial business combination, as well as to pay any tax obligations that we may owe. The funds in the trust account may be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. While we are entitled to have released to us for such purposes certain interest income earned on the funds in the trust account, a substantial decline in interest rates may result in our having insufficient funds available with which to locate, structure, negotiate and obtain approval of our initial business combination. In such event, we may need to seek to borrow funds or issue securities for such purposes, as to which no assurance can be given, or may be forced to liquidate. No party is under any obligation to advance funds to us in the future.

 

Our determination of the offering price of our units and of the aggregate amount of proceeds we are raising in this offering was more arbitrary than typically would be the case if we were an operating company rather than an acquisition vehicle.

 

Prior to this offering, we had no operating history and there was no public market for any of our securities. The public offering price of the units, the terms of the initial units and the private placement warrants, the aggregate proceeds we are raising and the amount to be placed in a trust account were the products of negotiations between the underwriters and us. The factors that were considered in making these determinations included:

 

 

 

Our initial business combination must be with one or more businesses, or a portion of such business or businesses, whose fair market value, individually or collectively, is equal to at least 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination. Accordingly, prior to 24 months following the completion of this offering, we will seek to consummate our initial business combination with a business or businesses whose fair market value is equal to at least approximately $189,630,348, assuming no exercise of the underwriters’ over-allotment option. The actual amount of consideration which we will be able to pay for our initial business combination will depend on whether we choose, or are able, to pay a portion of our initial business combination consideration with shares of our common stock or if we are able to finance a portion of the consideration with shares of our common stock or with debt or other equity financing and the number of shares of common stock that are converted into a pro rata share of the amount on deposit in the trust account as described under “Proposed Business — Consummating an Initial Business Combination — Conversion Rights.” Although these factors were considered, the determination of our per unit offering price and aggregate proceeds was more arbitrary than typically would be the case if we were an operating company, as it is based on our executive officers’ estimate of the amount needed to fund our operations for the next 24 months and to consummate our initial business combination, because we have no operating history or financial results. In addition, because we have not identified any specific target businesses, management’s assessment of the financial requirements necessary to consummate our initial business combination may prove to be inaccurate, in which case we may not have sufficient funds to consummate our initial business combination and we will be required to either find additional financing, as to which no assurance can be given, or liquidate and distribute funds then held in the trust account to public stockholders.

 

If third parties bring claims against us or if we go bankrupt, the proceeds held in the trust account could be reduced and the per share liquidation or conversion price received by our public stockholders could be less than approximately $9.83 per share.

 

Placing the funds in a trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors and prospective target businesses waive any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, we are not obligated to obtain a waiver from any potential creditor or potential target business and there is no guarantee that they will agree to provide such a waiver, which is not a condition to our doing business with anyone. We will seek to secure waivers that we believe are valid and enforceable, but it is possible that a waiver may later be found to be invalid or unenforceable. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Accordingly, the proceeds held in the trust account could be subject to claims that would take priority over the claims of our public stockholders and the per share liquidating distribution or conversion payment could be less than the approximately $9.83, plus accrued interest expected to be held in the trust account upon completion of this offering (assuming no exercise of the underwriters’ over-allotment option) as a result of such claims. If we are unable to consummate our initial business combination and are required to liquidate,

KBW, Inc. has agreed that it will be liable to us if and to the extent claims by third parties reduce the amounts in the trust account available for payment to our public stockholders in the event of our liquidation and the claims are made by one or more of our vendors with which we entered into a contractual relationship following consummation of this offering or by a prospective target business. A “vendor” refers to a third party that provides goods or services to us (including providers of financing). However, the agreement entered into by KBW, Inc. specifically provides for two exceptions to its indemnification obligations: there will be no liability (1) as to any claimed amounts owed to a third party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable), or (2) as to any claims under our indemnity to the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Furthermore, there could be claims from parties other than vendors or target businesses that would not be covered by the indemnity from KBW, Inc., such as stockholders and other claimants who are not parties in contract with us who file a claim for damages against us. Based on representations made to us by KBW, Inc., we currently believe that it is capable of funding a shortfall in our trust account to satisfy its foreseeable indemnification obligations. However, we have not asked them to reserve for such an eventuality. We cannot assure you that KBW, Inc. will be able to satisfy its indemnification obligations or that the proceeds in the trust account will not be reduced by such claims. In the event that the proceeds in the trust account are reduced and KBW, Inc. asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether we would take legal action against KBW, Inc. to enforce its indemnification obligations. Furthermore, creditors may seek to interfere with the distribution of the trust account pursuant to federal or state creditor and bankruptcy laws, which could delay the actual distribution of such funds or reduce the amount ultimately available for distribution to our public stockholders. If we are required to file a bankruptcy case or an involuntary bankruptcy case is filed against us that is not dismissed, the funds held in the trust account will be subject to applicable bankruptcy law and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims are permitted against the trust account, the per share liquidating distribution will be less than the approximately $9.83 per share expected to be held in the trust account upon completion of this offering (assuming no exercise of the underwriters’ over-allotment option).

 

Our independent directors may decide not to enforce KBW, Inc.’s indemnification obligations, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.

 

KBW, Inc. has agreed to indemnify us, subject to exceptions, in the event of our liquidation for claims made by one or more of our vendors (as described above) for our obligations in respect of services rendered or products sold to us by such vendor or for claims made by a prospective target business, in each case only to the extent necessary to ensure that the amounts in the trust account are not reduced by claims made by such party to the extent that the payment of such debts actually reduces the amount in the trust account payable to our public stockholders in the event of our liquidation. In the event that the proceeds in the trust account are reduced and KBW, Inc. asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether we would take legal action against KBW, Inc. to enforce its indemnification obligations. While we currently expect that our independent directors would take action on our behalf against KBW, Inc. to enforce its indemnification obligations, it is possible that our independent directors in exercising their business judgment may choose not to do so in a particular instance. If our independent directors choose not to enforce the indemnification obligations of KBW, Inc., the amount of funds in the trust account available for distribution to our public stockholders will be reduced and the per share liquidating distribution will be less than the approximately $9.83 expected to be held in the trust account upon completion of this offering (assuming no exercise of the underwriters’ over-allotment option).

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them in our liquidation. Any liability may extend well beyond the third anniversary of the date of distribution because we do not intend to comply with the procedures set forth in Section 280 of the Delaware General Corporation Law.

 

We have 24 months after the completion of this offering in which to consummate our initial business combination. We have no obligation to return funds to our stockholders prior to such date unless we consummate a business combination before then, and only then in cases where stockholders have voted against our initial business combination and sought conversion of their shares in connection with a stockholder vote to approve our initial business combination. Only after the expiration of this time period will public stockholders be entitled to liquidating distributions if we are unable to complete a business combination. Accordingly, the funds held in our trust account may be unavailable to stockholders until such date.

 

If we are unable to consummate our initial business combination within 24 months after the completion of this offering, our corporate existence will cease except for the purposes of winding-up our affairs and liquidating. Under Sections 280 through 282 of the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period from the date of the last notice of rejection given by the corporation before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution (unless such three-year period is extended by the Delaware Court of Chancery). However, it is our intention to make liquidating distributions to our stockholders as soon as reasonably possible after the expiration of the 24 month period and, therefore, we do not intend to comply with those procedures. Because we will not be complying with those procedures, we are required, pursuant to Section 281 of the Delaware General Corporation Law to adopt a plan of distribution that will provide for the payment, based on facts known to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that may be potentially brought against us within the subsequent 10 years. Accordingly, we would be required to provide for any creditors known to us at that time or those that we believe could be potentially brought against us within the subsequent 10 years prior to distributing the funds held in the trust to stockholders. We cannot assure you that we will properly assess all claims that may be potentially brought against us. If we underestimate claims that may be potentially brought against us, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) in a liquidation and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, we cannot assure you that third parties will not seek to recover from our stockholders amounts owed to them by us. In addition, because we are required to dissolve before the funds from the trust can be distributed to our stockholders, there could be time delays in making such a distribution. However, because we are a blank check company rather than an operating company and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors that we engage after the completion of this offering (such as accountants, lawyers, investment bankers, etc.) and potential target businesses. We intend to have all vendors that we engage after the completion of this offering and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, although no assurance can be given that such parties will execute such agreements or that such agreements will be enforceable. Furthermore, we cannot assure you that we will properly assess all claims that may be potentially brought against us. If we underestimate claims that may be potentially brought against us, our stockholders could potentially be liable for any claims to the extent of distributions (but not more) received by them in our liquidation and any liability of our stockholders may extend well beyond the third anniversary of our liquidation.

If we are required to file a bankruptcy case or an involuntary bankruptcy case is filed against us, which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after          , 2010 if we have failed to consummate our initial business combination, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. In addition, our directors may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, thereby exposing themselves and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure that claims will not be brought against us for these reasons.

 

Because we have not selected any specific target businesses, you will be unable to ascertain the merits or risks of any particular target business’s operations.

 

We may consummate our initial business combination with an operating company in the financial services industry, but will not limit the pursuit of acquisition opportunities only within that industry. Because we have not yet identified or approached any specific target business with respect to a business combination, there is no basis on which to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we consummate our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or undercapitalized entity. Although our executive officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in an acquisition target. Except for the limitation that a target business is required have a fair market value of at least 80% of the balance in the trust account (excluding the amount held in the trust account representing deferred underwriting discounts and commissions, interest income that may be released to us and taxes payable) at the time of the acquisition, we will have virtually unrestricted flexibility in identifying and selecting a prospective target business. For a more complete discussion of our potential target businesses, see the section entitled “Proposed Business — Consummating an Initial Business Combination — Selection of a Target and Structuring of an Initial Business Combination.”

 

A significant portion of our working capital could be depleted in pursuing business combinations that are not consummated.

 

It is anticipated that the identification and investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. In addition, we may opt to make down payments or pay exclusivity or similar fees in connection with structuring and negotiating a business combination. If a decision is made not to consummate a specific business combination, the costs incurred up to that point in connection with the abandoned transaction, potentially including down payments or exclusivity or similar fees, will not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate our initial business combination for any number of reasons, including those beyond our control, such as if our public stockholders holding 30% or more of our shares of common stock vote against our initial business combination and elect to exercise their conversion rights even though a majority of the shares of our common stock voted by the public stockholders are voted in favor of the business combination. Any such event will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and combine with another business.

We may issue additional shares of our capital stock, including through convertible debt securities, to consummate our initial business combination, which would reduce the equity interest of our stockholders and may cause a change in control of our ownership.

 

Our certificate of incorporation authorizes the issuance of up to 150,000,000 shares of common stock, par value $0.0001 per share, and 500,000 shares of preferred stock, par value $0.0001 per share. Immediately after this offering and the private placement, there will be 72,625,000 authorized but unissued shares of our common stock available for issuance (after appropriate reservation of shares issuable upon full exercise of all of our initial warrants, private placement warrants and warrants included in the units being sold in this offering and the underwriters’ over-allotment option) and all of the 500,000 shares of preferred stock available for issuance. Although we have no commitments as of the date of this offering to issue any additional securities, we may issue a substantial number of additional shares of our common stock, preferred stock or a combination of both, including through convertible debt securities, as consideration for or to finance a business combination. The issuance of additional shares of our common stock or any number of shares of preferred stock, including upon conversion of any debt securities, may:

 

 

The underwriting agreement prohibits us, prior to our initial business combination, from issuing additional units, additional common stock, preferred stock, additional warrants or any options or other securities convertible or exchangeable into common stock or preferred stock without the prior written consent of Banc of America Securities LLC.

 

We may be unable to obtain additional financing, if required, to consummate our initial business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination.

 

Although we believe that the net proceeds of this offering and the proceeds from the sale of the private placement warrants will be sufficient to allow us to consummate our initial business combination, because we have not yet identified or approached any prospective target businesses, we cannot ascertain the capital requirements for any particular business combination. If the net proceeds of this offering and the proceeds from the sale of the private placement warrants prove to be insufficient, because of the size of the initial business combination or the depletion of the available proceeds in the trust account in search of target businesses, or because we become obligated to convert into cash a significant number of shares from public stockholders exercising their conversion rights, we may be required to seek additional financing through the issuance of equity or debt securities or other financing arrangements. We cannot assure you that such financing will be available on favorable terms, or at all.

 

Although we have no current plans to do so, if we were to incur a substantial amount of debt to finance our initial business combination, such incurrence of debt could:

 

 

 

 

 

To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we may be compelled to restructure or abandon that particular business combination and seek alternative target businesses. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business or businesses. The failure to secure additional financing could have a material adverse effect on the development, growth and prospects of our combined business or businesses. No party, including our executive officers, directors and existing holders, is required to provide any financing to us in connection with or after the consummation of our initial business combination.

 

KBW entities and KBW’s asset management business may themselves compete or may represent a client in competition with us to acquire potential target businesses, thereby causing conflicts of interest as to our knowledge of or ability to pursue potential target businesses. This conflict of interest could have a negative impact on our ability to consummate a business combination.

 

KBW undertakes a wide range of financial advisory, investment banking, asset management and other activities for a wide variety of clients, including institutions, companies and individuals, and for its own account. Accordingly, there may be situations in which KBW has an obligation or an interest that actually or potentially conflicts with our interests. These conflicts may not be resolved in our favor and, as a result, we may be denied certain attractive acquisition opportunities or may be otherwise disadvantaged in some situations by our relationship to KBW.

 

KBW currently operates an asset management business in the United States, including the management of KBW Capital Partners I, a private equity fund that makes investments in financial institutions and related entities. Mr. Roth, our Chief Executive Officer and Director, serves as the Managing Director and a Member of the Investment Committee of KBW Capital Partners I. KBW Capital Partners I currently targets investments that do not exceed $15 million in size, which would be a smaller size than is suitable for our initial business combination. However, if we were to pursue multiple simultaneous targets for our initial business combination, we may compete with KBW Capital Partners I for one or more of such targets. Furthermore, KBW Capital Partners I may also participate in transactions with other investors in the acquisition of a larger target. If KBW Capital Partners I were to participate in a transaction with other investors in the acquisition of a larger target or change its investment criteria, KBW Capital Partners I may be in direct competition with us for a possible target for our initial business combination. In addition, KBW, including its asset management business, also may make, or seek to make, investments in securities or investments in, or business combinations with, entities or businesses that may relate to, or be in conflict with, our interests. These activities may include organizing future investment vehicles that may compete directly with us and conflict with our interests.

Other clients of KBW’s advisory and capital markets business may also compete with us for acquisition opportunities meeting our investment objectives. If KBW is engaged to act for any such clients, we may be precluded from pursuing such opportunities. In addition, investment ideas generated within KBW, including by Mr. Duffy, Mr. Roth, Mr. Senchak and other persons who may make decisions for us, may be suitable for both us and for an investment banking client or a current or future KBW-managed investment vehicle and may be directed to such client or investment vehicle rather than to us. KBW’s advisory business may also be engaged to advise the seller of an entity, business or assets that would qualify as an acquisition opportunity for us. In such cases, we may be precluded from participating in the sale process or from purchasing the entity, business or assets. If we are permitted to pursue the acquisition opportunity, KBW’s interests or its obligations to the seller will conflict with our interests.

 

Neither KBW nor our executive officers or directors who are also employed by KBW have any obligation to present us with any opportunity for a potential business combination of which they become aware. KBW and/or our management, in their capacities as officers of KBW or in their other endeavors, may choose or be obligated to present potential business combinations to KBW, current or future KBW-managed investment vehicles, including KBW Capital Partners I, or third parties, including clients of KBW, before they present such opportunities to us. As a result, you should assume that to the extent any of our executive officers or directors who are also employed by KBW identifies an opportunity for a potential business combination equally suitable for us and another entity to which such person has a fiduciary duty or pre-existing contractual obligation to present such opportunity, such executive officer or director will first give such opportunity to such other entity, and he or she will only present such opportunity to us to the extent such other entity first rejects or is unable to pursue such opportunity. In addition, our independent directors may have fiduciary duties or pre-existing contractual obligations that prevent them from presenting otherwise suitable target businesses to us. Our independent directors are under no obligation to present to us opportunities for a potential business combination of which they become aware unless the particular opportunity was expressly offered to the independent director solely in his or her capacity as one of our directors.

 

Some of our executive officers and directors may remain with us following our initial business combination, which may result in a conflict of interest in determining whether a particular target business is appropriate for a business combination and in the public stockholders’ best interests.

 

Some of our executive officers and directors may continue to be involved in our management following our initial business combination. If any or all of them decide to do so, the personal and financial interests of our executive officers and directors may influence them to condition a business combination on their retention by us and to view more favorably target businesses that offer them a continuing role, either as an officer, director, consultant, or other third-party service provider, after the business combination. Our executive officers and directors could be negotiating the terms and conditions of the business combination on our behalf at the same time that they, as individuals, are negotiating the terms and conditions related to an employment, consulting or other agreement with representatives of the potential business combination candidate. As a result, there may be a conflict of interest in the negotiation of the terms and conditions related to such continuing relationships as our executive officers and directors may be influenced by their personal and financial interests rather than the best interests of our public stockholders.

 

Our executive officers and directors will allocate their time to other business interests, thereby causing conflicts of interest in their determination as to how much time to devote to us. This could have a negative impact on our ability to consummate our initial business combination.

 

Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our affairs and the search for a business combination, on the one hand, and their other business interests, on the other hand. We do not intend to have any full-time employees prior to the consummation of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he or she is entitled to substantial compensation and none of our executive officers are obligated to contribute any specific number of hours per week to us. Mr. Duffy is Chairman and Chief Executive Officer of KBW, Inc. and Keefe, Bruyette & Woods, Inc. Mr. Roth is Chief Executive Officer of KBW Asset Management and the Managing Director and Member

of the Investment Committee of KBW Capital Partners I. Mr. Senchak is Vice Chairman and President of KBW, Inc. and Keefe, Bruyette & Woods, Inc. Our outside directors also serve as officers, board members or advisors for other entities, including, without limitation, Mr. Kanas serving as an advisor to Capital One Financial Corporation and as a Senior Advisor to WL Ross & Co. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to consummate our initial business combination.

 

Our executive officers and directors are, and may in the future become, affiliated with entities in similar businesses and, accordingly, may have conflicts of interest in determining to which entity an opportunity for a particular business combination should be presented.

 

Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses, or a portion of such business or businesses. Our executive officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business. As described herein, our executive officers and certain of our directors are employed by KBW. Our outside directors also serve as officers, board members or advisors for other entities, including, without limitation, Mr. Kanas serving as an advisor to Capital One Financial Corporation and as a Senior Advisor to WL Ross & Co. As a result, our executive officers and directors may compete with us for attractive opportunities for business combinations. In each case, our executive officers’ and directors’ existing directorships or other responsibilities may give rise to contractual or fiduciary obligations that take priority over any obligation owed to us. If any of our executive officers and directors become aware of opportunities for business combinations that may be appropriate for presentation to us as well as any other entity with which he or she is or may be affiliated, due to existing affiliations with such other entities they may have contractual and fiduciary obligations to present, or may otherwise decide to present, potential business opportunities to those entities prior to presenting them to us.

 

We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors or KBW which may raise potential conflicts of interest.

 

In light of our executive officers’, directors’ and KBW’s involvement with other entities and our initial focus on target businesses in the financial services industry, we may decide to acquire one or more businesses affiliated with our executive officers, directors or KBW. As described herein, our executive officers and employee holders and certain of our directors are affiliated with KBW. Our outside directors also serve as officers, board members or advisors for other entities, including, without limitation, Mr. Kanas serving as an advisor to Capital One Financial Corporation and as a Senior Advisor to WL Ross & Co. KBW and such other entities may compete with us for business combination opportunities. Our executive officers, directors and KBW are not currently aware of any specific opportunities for us to consummate a business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in “Proposed Business — Consummating an Initial Business Combination — Selection of a Target and Structuring of an Initial Business Combination” and such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding the fairness to our stockholders from a financial point of view of a business combination with one or more businesses affiliated with our executive officers, directors or KBW, potential conflicts of interest still may exist and, as a result, the terms of the initial business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest. Moreover, investment banking firms providing fairness opinions typically place limitations on the purposes for which the opinion may be used or the persons who may rely upon such opinion and there can be no assurance that, as a result of such limitations or applicable law, stockholders will be entitled to rely on the opinion.

None of our executive officers or directors has ever been associated with a publicly held blank check company.

 

None of our executive officers or directors has ever served as an officer or director of a development stage public company with the business purpose of raising funds to acquire a business. Accordingly, you may not be able to adequately evaluate their ability to successfully consummate our initial business combination through a blank check company or a company with a structure similar to ours.

 

Because our executive officers and directors will own equity in us prior to the completion of this offering, they may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.

 

Prior to the completion of this offering, our executive officers and directors will own           initial shares and, in the case of our executive officers, private placement warrants, and KBW, Inc. will own initial shares, initial warrants and private placement warrants. Upon our liquidation, none of them will have the right to receive distributions from the trust account with respect to the initial shares they acquired prior to the completion of this offering and the private placement warrants will expire worthless. Accordingly, they would lose their entire investment in us represented by such shares and private placement warrants were a liquidation to occur. Furthermore, our executive officers and directors may have interests in KBW, Inc. As a result, our executive officers’ and directors’ personal and financial interests may influence their motivation in identifying and selecting target businesses and consummating our initial business combination in a timely manner. This may also result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest.

 

Our executive officers’ and directors’ and KBW employees’ interests in obtaining reimbursement for any out-of-pocket expenses incurred by them may lead to a conflict of interest in determining whether a particular target business is appropriate for a business combination and in the public stockholders’ best interest.

 

Our executive officers and directors and employees of KBW will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the trust account and amounts properly withdrawable from the trust account unless and until the initial business combination is consummated. Amounts available for such expenses are based upon our executive officers’ estimate of the amount needed to fund our operations for the next 24 months and consummate our initial business combination. This estimate may prove to be inaccurate, especially if a portion of such amounts is used to make a down payment in connection with our initial business combination or pay exclusivity or similar fees or if we expend a significant portion of such amounts in pursuit of a business combination that is not consummated. The financial interests of our executive officers and directors could influence their motivation in selecting a target and, thus, there may be a conflict of interest when determining whether a particular business combination is in our public stockholders’ best interest.

 

We may enter into agreements with consultants or financial advisers that provide for the payment of fees upon the consummation of our initial business combination, and, therefore, such consultants or financial advisers may have conflicts of interest.

 

If we agree to pay consultants or financial advisers fees that are tied to the consummation of our initial business combination, they may have conflicts of interests when providing services to us, and their interests in such fees may influence their advice with respect to a potential business combination.

 

Provisions in our certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.

 

Our certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interest. Our certificate of incorporation provides that our board of directors is divided into three classes, each of which will generally serve for a term of three years, with only one class of directors being elected each year. As a result, at any annual meeting, only a minority of

the board of directors will be considered for election. Because our “staggered board” would prevent our stockholders from replacing a majority of our board of directors at any annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interest of stockholders. Furthermore, under our certificate of incorporation and by-laws, our directors may only be removed by a majority of our stockholders and only for cause. In addition, our board of directors has the ability to designate the terms of and issue new series of preferred stock.

 

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

 

We will not generally be required to obtain a determination of the fair market value of a target business or target businesses from an unaffiliated, independent investment banking firm.

 

Our initial business combination must be with one or more businesses, or a portion of such business or businesses, whose fair market value, individually or collectively, is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination. The fair market value of such business or businesses will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, earnings, cash flows and book value, and will include any indebtedness of such businesses that we repay, refinance or assume in connection with the business combination. If our board of directors is not able to independently determine that the target business has a sufficient fair market value to meet the threshold criterion or if any of our executive officers or directors or KBW is affiliated with that target business, we will obtain an opinion from an unaffiliated, independent investment banking firm which is a member of the Financial Industry Regulatory Authority, or FINRA, with respect to the fair market value of the target business. In all other instances, we do not expect to obtain or provide our stockholders with a fairness opinion. Investment banking firms providing fairness opinions typically place limitations on the purposes for which the opinion may be used, and there can be no assurances that, as a result of such limitations or applicable law, stockholders will be entitled to rely on the opinion. We expect to require that any firm selected by us to provide a fairness opinion will adhere to general industry practice in stating the purposes for which its opinion may be used. If no opinion is obtained or if stockholders are not permitted to rely on the opinion, our stockholders will be relying solely on the judgment of our board of directors with respect to the determination of the fair market value of our initial business combination.

 

The AMEX may delist our securities from trading on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

 

We anticipate that our units, and, after the date of separation, shares of common stock and warrants, will be listed on the AMEX on or promptly after the date of this prospectus or the date of separation, as the case may be. Although after giving effect to this offering we expect to meet on a pro forma basis the minimum initial listing standards set forth in Sections 101 (b) and (c) of the American Stock Exchange Company Guide, we cannot assure you that our securities will be, or will continue to be, listed on the AMEX in the future or prior to a business combination. In order to continue listing our securities on the AMEX prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally between $2,000,000 and $4,000,000) and a minimum number of public stockholders (generally between 300 and 400 stockholders). Additionally, our common stock cannot have what is deemed to be a “low selling price” as determined by the AMEX. Additionally, in connection with our initial business combination, it is likely that the AMEX may require us to file a new initial listing application and meet its initial listing requirements which are more rigorous than AMEX’s continued listing requirements. For instance, our stock price would generally be required to be at least $3 per share and our stockholders’ equity would generally be required to be at least $4 million. We cannot assure you that we will be able to meet those initial listing requirements at that time.

If the AMEX delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on the OTC Bulletin Board or the “pink sheets.” As a result, we could face significant material adverse consequences, including:

 

 

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually our common stock and warrants will be listed on the AMEX, our units, common stock and warrants will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the AMEX, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.

 

If our common stock becomes subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

 

If at any time our securities are no longer listed on the AMEX or another exchange or we have net tangible assets of $5,000,000 or less or our common stock has a market price per share of less than $5.00, transactions in our common stock may be subject to the “penny stock” rules promulgated under the Exchange Act. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

 

 

If our common stock becomes subject to these rules, broker-dealers may find it difficult to effect customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed and you may find it more difficult to sell our securities on favorable terms, or at all.

 

We may only be able to consummate one business combination, which may cause us to be solely dependent on a single business and a limited number of services or products.

 

The net proceeds from this offering and the proceeds from the sale of the private placement warrants, after reserving $250,000 of the proceeds for our operating expenses, will provide us with approximately

$237,037,935 (or $271,912,935 if the underwriters’ over-allotment option is exercised in full), excluding deferred underwriting discounts and commissions, which we may use to consummate our initial business combination, assuming that none of our public stockholders exercise their conversion rights. Although we are permitted to consummate our initial business combination with more than one target business, we currently intend to consummate our initial business combination with a single business whose fair market value is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination. If we acquire more than one target business, additional issues would arise, including possible complex accounting issues, which would include generating pro forma financial statements reflecting the operations of several target businesses as if they had been combined, and numerous logistical issues, which would include attempting to coordinate the timing of negotiations, proxy statement disclosure and closing, with multiple target businesses. In addition, we would be exposed to the risk that conditions to closings with respect to the initial business combination with one or more of the target businesses would not be satisfied, bringing the fair market value of the initial business combination below the required threshold of 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable). As a result, we are likely to consummate our initial business combination with only a single business, which may have only a limited number of services or products. The resulting lack of diversification may:

 

 

If our initial business combination is with a single business, we will not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities that may have the resources to consummate several business combinations in different industries or different areas of a single industry so as to diversify risks and offset losses. Furthermore, the prospects for our success may be entirely dependent upon the future performance of the initial target business or businesses we acquire.

 

Any attempt to consummate more than one transaction as our initial business combination will make it more difficult to consummate our initial business combination.

 

In the event that we are unable to identify a single business with which to consummate our initial business combination, we may seek to combine contemporaneously with multiple businesses or a portion of such businesses whose collective fair market value is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combinations. Business combinations involve a number of special risks, including diversion of management’s attention, legal, financial, accounting and due diligence expenses, and the general risk that a transaction will not be consummated. To the extent we try to consummate more than one transaction at the same time, all of these risks will be exacerbated, especially in light of our limited financial and other resources. Consummating our initial business combination through more than one transaction likely would result in increased costs as we would be required to conduct a due diligence investigation of more than one business and negotiate the terms of the initial business combination with multiple entities. In addition, due to the difficulties involved in consummating multiple business combinations concurrently, our attempt to consummate our initial business combination in this manner would increase the chance that we would be unable to successfully consummate our initial business combination in a timely manner. In addition, if our initial business combination entails simultaneous transactions with different entities, each entity will need to agree that its transaction is contingent upon the simultaneous closing of the other transactions, which may make it more difficult for us, or delay our ability, to consummate our initial business combination. As a result, if we attempt to consummate our initial business combination in the form of multiple transactions, there is an increased risk that we will not be able to consummate some or all of those transactions, which could result in our failure to satisfy the requirements for our initial business combination and force us to liquidate.

We may combine with a target business with a history of poor operating performance and there is no guarantee that we will be able to improve the operating performance of that target business.

 

Due to the competition for business combination opportunities, we may combine with a target business with a history of poor operating performance if that target business has attractive attributes that we believe could be the basis of a successful business after consummation of our initial business combination. A business with a history of poor operating performance may be characterized by, among other things, several years of financial losses, a smaller market share than other businesses operating in a similar geographical area or industry or a low return on capital compared to other businesses operating in the same industry. In determining whether one of these businesses would be an appropriate target, we would base our decision primarily on the fair market value of such a business. We would consider, among other things, its operating income, its current cash flows and its potential to generate cash in the future, the value of its current contracts and our assessment of its ability to attract and retain new customers. However, combining with a target business with a history of poor operating performance can be extremely risky and we may not be able to improve its operating performance. If we cannot improve the operating performance of such a target business following our initial business combination, then our business, prospects, financial condition, liquidity, cash flows and results of operations would be adversely affected. Factors that could result in our not being able to improve operating performance include, among other things:

 

 

 

 

We may be required to subsequently take write-offs restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investments.

 

We must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and expensive due to the operations, accounting, finance, and legal professionals who must be involved in the due diligence process. We may have limited time to conduct such due diligence due to the requirement that we complete our initial business combination within 24 months after the consummation of this offering. Even if we conduct extensive due diligence on a target business with which we combine, this diligence may not reveal all material issues that may affect a particular target business, and factors outside the control of the target business and outside of our control may arise later. In addition, in pursuing our acquisition strategy, we may seek to effect our initial business combination with one or more privately held companies. Since little or no public information may exist about these companies, we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information.

 

If our diligence fails to identify issues specific to a target business, industry or the environment in which the target business operates, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges or expenses that could result in our reporting losses. Even though these actions may involve non-cash items and may not have an immediate impact on our liquidity, the fact that we take actions of this nature could contribute to negative market perceptions about us or our common stock. In addition, actions of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing in connection with a business combination or thereafter.

 

If we effect our initial business combination with a business located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.

 

We may effect our initial business combination with a target business located outside of the United States. If we do, we would be subject to any special considerations or risks associated with businesses operating in the target’s home jurisdiction, including any of the following:

 

 

We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our business, prospects and financial condition and performance would likely suffer.

 

If we effect our initial business combination with a business located outside of the United States, the laws applicable to such business will likely govern many of our material agreements and we may not be able to enforce our legal rights.

 

If we effect our initial business combination with a target business located outside of the United States, the laws of the country in which such target business operates will likely govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available in this non-United States jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a target business located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some or all of our executive officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our executive officers or directors or to enforce judgments of the United States courts predicated upon civil liabilities and criminal penalties of our executive officers and directors under U.S. federal securities laws.

 

Our existing holders will own a substantial interest in us upon completion of this offering and thus may significantly influence us and certain actions requiring a stockholder vote.

 

Upon completion of this offering, our existing holders will collectively, directly or indirectly, own 20% of our issued and outstanding shares of common stock (including shares of common stock included in the initial units and assuming that they do not transfer any of their initial securities as permitted herein and do not purchase any units in this offering and that the underwriters do not exercise their over-allotment option).

 

Our existing holders, executive officers and directors may vote any shares of common stock owned by them in any manner they may choose on most matters. However, our existing holders have agreed, in connection with the stockholder vote required to approve our initial business combination, to vote their initial

shares in the same manner as a majority of the shares of our common stock are voted by our public stockholders (excluding our executive officers, directors and existing holders with respect to any units that they purchase in this offering or any units or shares of common stock included in such units that they purchase in the secondary market) in the votes required to approve our initial business combination and the amendment to our certificate of incorporation to provide for our perpetual existence. Our existing holders, executive officers and directors have agreed that if they acquire shares of common stock (including shares of common stock included in any units being sold in this offering) in or following the completion of this offering, such shares will be considered part of the holdings of our public stockholders and they have agreed that they will vote all such acquired shares in favor of our initial business combination and in favor of an amendment to our certificate of incorporation to provide for our perpetual existence.

 

As a result of their ownership of shares of our common stock upon completion of this offering, our existing holders may exert substantial influence on amendments to our certificate of incorporation and approval of material transactions (including our initial business combination). Except as may otherwise be set forth in this prospectus, none of our executive officers, directors or existing holders or their respective affiliates has indicated any intention to purchase units in this offering or units or shares of common stock included in such units in the secondary market or in private transactions. However, if a significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our executive officers, directors and existing holders and their respective affiliates could, in their sole discretion, determine to make such purchases in the secondary market or in private transactions and exert additional influence over the approval of our initial business combination.

 

Our board of directors will be divided into three classes, each of which generally will serve for a term of three years, with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, in which case all of the current directors will continue in office at least until the consummation of the initial business combination. If there is an annual meeting, as a consequence of this “staggered” board of directors, only a minority of the board of directors would be considered for election. As a result of their ownership of initial shares, our existing holders may exert considerable influence on the election of our directors. Moreover, except to the extent stockholder proposals are properly and timely submitted, our directors will determine which matters, including prospective business combinations, to submit to a stockholder vote.

 

Our executive officers, directors and existing holders may purchase units in this offering or units or shares of our common stock included in such units in the secondary market, which may give them greater influence over the approval of our initial business combination.

 

In the event that our executive officers, directors and existing holders acquire units in this offering or units or shares of our common stock included in such units in the secondary market, they have agreed to vote such shares in favor of our initial business combination. These additional purchases would allow our executive officers, directors and existing holders to exert additional influence over the approval of our initial business combination. Factors they would consider in making such additional purchases would include consideration of the current trading price of our common stock and whether any such additional purchases would likely increase the chances that our initial business combination would be approved. In addition, if our executive officers, directors and existing holders make such additional purchases, then our public stockholders (other than our existing holders) will hold proportionately fewer shares, and therefore it is likely that such public stockholders will ultimately convert fewer shares into a pro rata portion of the trust account, making it more likely that we will remain under the 30% conversion rate that is required in order to approve our initial business combination.

 

The ability of our executive officers, directors and existing holders to acquire units in this offering or units or shares of common stock included in such units in the secondary market, vote the acquired shares in favor of our initial business combination and effectively reduce the number of shares that our other public stockholders may elect to convert into a pro rata portion of the trust account may allow us to consummate an initial business combination that otherwise would not have been approved absent the foregoing. Because our existing holders purchased their initial securities at a lower price than the units being purchased by our public

stockholders in this offering, our existing holders may profit from a business combination that would be unprofitable for our other public stockholders.

 

Our initial holder paid approximately $0.003 per initial unit for its initial units, and accordingly, you will experience immediate and substantial dilution from the purchase of the shares of our common stock included in the units being sold in this offering.

 

The difference between the public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering represents dilution to you and the other investors in this offering. The fact that our initial holder purchased its initial units at a price of approximately $0.003 per initial unit prior to this offering has significantly contributed to this dilution. Assuming this offering is completed (without any exercise of the underwriters’ over-allotment option), you and the other investors in this offering will incur an immediate and substantial dilution of 31.1% or $3.11 per share of common stock (the difference between the pro forma net tangible book value per share of common stock of $6.89 and the initial offering price of $10.00 per unit).

 

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

 

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration at a price of $0.01 per warrant, provided that the closing price of our common stock on the AMEX, or other national securities exchange on which our common stock may be traded, equals or exceeds $14.25 per share for any 20 trading days within a 30 trading-day period ending on the third business day prior to proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. Our ability to redeem the warrants may limit the value of your investment in our warrants. In addition, redemption of the outstanding warrants could force you to exercise your warrants, whether by paying the exercise price in cash, at our discretion, or through a cashless exercise, at a time when it may be disadvantageous for you to do so, to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

 

We may redeem your unexpired warrants prior to their exercise which may benefit holders of the initial warrants and the private placement warrants.

 

If warrants included in the units being sold in this offering are redeemed and the market price of a share of our common stock rises following such redemption, holders of the initial warrants and the private placement warrants could potentially realize a larger gain on their exercise or sale than would be available absent such warrant redemption, although we do not know if the price of our common stock would increase following warrant redemption. If our share price declines in periods subsequent to a warrant redemption and the holders continue to hold their initial warrants and private placement warrants, the value of their initial warrants and private placement warrants may also decline.

 

Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.

 

If we call the warrants included in the units being sold in this offering for redemption after the redemption criteria described in this prospectus have been satisfied, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In such cases, assuming a holder elects to exercise all of his, her or its warrants, such holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants being tendered, multiplied by the difference between the exercise price of the warrants and the “fair market value” by (y) the

fair market value and then would receive shares of common stock underlying the non-surrendered warrants. The “fair market value” shall mean the average closing price of our common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of the warrants. If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.

 

Our initial warrants, private placement warrants and warrants included in the units being sold in this offering may have an adverse effect on the market price of common stock and make it more difficult to consummate our initial business combination.

 

As part of the units being sold in this offering, we will be issuing warrants to purchase 25,000,000 shares of common stock (or 28,750,000 shares of common stock if the underwriters’ over-allotment option is exercised in full). In addition, we previously issued initial warrants to KBW, Inc. to purchase 7,187,500 shares of common stock (subject to reduction if the underwriters fail to exercise their over-allotment option) and will be issuing private placement warrants to KBW, Inc. and the employee holders to purchase an aggregate of 5,500,000 shares of common stock. To the extent we issue shares of common stock to consummate our initial business combination, the potential for the issuance of substantial numbers of additional shares upon exercise of these warrants could make us a less attractive partner for a business combination in the eyes of a target business, as such warrants, when exercised, will significantly increase the number of issued and outstanding shares of our common stock and the potential for such issuance could reduce the value of the shares that may be issued to consummate the initial business combination. Accordingly, the existence of our initial warrants, private placement warrants and warrants included in the units being sold in this offering may make it more difficult to consummate our initial business combination or may increase the cost of a target business if we are unable to consummate our initial business combination solely with cash. Additionally, the sale, or potential sale, of the shares underlying such warrants could have an adverse effect on the market price for our securities and on our ability to obtain future financing. If and to the extent these warrants are exercised, you will experience dilution to your holdings.

 

Our executive officers, directors and existing holders have registration rights and such registration rights may have an adverse effect on the market price of our common stock, and the existence of these rights may make it more difficult to consummate our initial business combination.

 

Our executive officers, directors and existing holders are entitled to demand on up to three occasions that we register the resale of their initial securities, private placement warrants and shares of common stock issuable upon exercise of the initial warrants or the private placement warrants. In addition, they also have certain “piggyback” registration rights and the right to registration on Form S-3 to the extent that we are eligible to use Form S-3. If they exercise their registration rights with respect to all of their shares of common stock (including the shares of common stock issuable upon exercise of the initial warrants or the private placement warrants and assuming exercise in full of the underwriters’ over-allotment option), then there will be an additional 19,875,000 shares of common stock eligible for trading in the public market. This potential increase in trading volume may have an adverse effect on the market price of our common stock. In addition, the existence of these rights may make it more difficult to consummate our initial business combination or increase the cost of a target business in the event that we are unable to consummate our initial business combination solely with cash, as the stockholders of a particular target business may be discouraged from entering into a business combination with us or demand greater consideration as a result of these registration rights and the potential future effect their exercise may have on the trading market for our common stock.

 

Failure to maintain an effective registration statement or the availability of a current prospectus relating to the shares of common stock issuable upon exercise of our warrants will preclude investors from being able to exercise their warrants and such warrants will expire worthless.

 

No warrants will be exercisable and we will not be obligated to issue shares of common stock unless at the time of exercise a registration statement relating to shares of common stock issuable upon exercise of the

warrants is effective and a current prospectus relating to shares of common stock issuable upon exercise of the warrants is available and those shares of common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of our warrants. Holders of the warrants are not entitled to net cash settlement and the warrants may only be settled by delivery of shares of our common stock and not cash. Under the terms of a warrant agreement between American Stock Transfer & Trust Company, as warrant agent, and us, we have agreed to use our commercially reasonable efforts to maintain an effective registration statement and the availability of a current prospectus relating to common stock issuable upon exercise of the warrants until the expiration of the warrants, and to take such action as is necessary to qualify the common stock issuable upon exercise of the warrants for sale in those states in which this offering was initially qualified. However, we cannot assure you that we will be able to do so. We have no obligation to settle the warrants for cash, in any event, and the warrants may not be exercised and we will not deliver securities therefor in the absence of an effective registration statement and an available current prospectus. The warrants may never become exercisable if we fail to comply with these registration requirements and, in any such case, the total price paid for each unit would effectively have been paid solely for the shares of common stock included therein. In any case, the warrants may be deprived of value and the market for the warrants may be limited if a registration statement relating to the common stock issuable upon the exercise of the warrants is not effective, a current prospectus relating to the common stock issuable upon the exercise of the warrants is not available or if the common stock is not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside. Factors such as an unexpected inability to remain current in our SEC reporting obligations or other material developments concerning our business or otherwise affecting us could present difficulties in maintaining an effective registration statement and current prospectus. If you are unable to exercise your warrants, the value of your warrants will be worthless when they expire.

 

We do not currently intend to pay dividends on shares of our common stock in the foreseeable future.

 

We have not paid any cash dividends on our common stock to date and do not currently intend to pay cash dividends prior to the completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the sole discretion of our board of directors at the time and will be contingent upon our historical and anticipated financial condition, revenues, if any, earnings, if any, liquidity and cash flows, if any, capital and tax requirements, contractual prohibitions and limitations and applicable law. It is the present intention of our board of directors to retain all earnings (other than a portion of our interest income which will be used for working capital purposes) and, accordingly, our board does not currently anticipate declaring any dividends in the foreseeable future. Because we do not expect to pay cash dividends on our common stock, any gains on an investment in our securities in this offering will be limited to the appreciation, if any, of the market value of our common stock, warrants and/or units.

 

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to consummate our initial business combination or operate over the near term or long term in our intended manner.

 

We do not plan to operate as an investment fund or investment company. Our plan is to acquire, hold, operate and grow for the long term one or more businesses or a portion of such business or businesses. We do not plan to operate as a passive investor or as a merchant bank seeking dividends or gains from purchases and sales of securities. However, if we elect to acquire an asset manager we may be required to register as an investment company or a registered investment adviser under the U.S. securities laws.

 

Companies that fall within the definition of an “investment company” set forth in Section 3 of the Investment Company Act are subject to registration and substantive regulation under the Investment Company Act. Companies that are subject to the Investment Company Act that do not become registered are normally required to liquidate and are precluded from entering into transactions or enforceable contracts other than as an incident to liquidation. The basic definition of an “investment company” in the Investment Company Act and related SEC rules and interpretations includes a company: (1) that is, proposes to be, or holds itself out as being engaged primarily in investing, reinvesting or trading in securities; (2) that has more than 40% of its

assets (exclusive of U.S. government securities and cash items) in “investment securities”; or (3) that is a “special situation investment company” (such as a merchant bank or private equity fund).

 

For example, if we were deemed to be an investment company under the Investment Company Act, we would be required to become registered under the Investment Company Act (or liquidate) and our activities would be subject to a number of restrictions, including, among others:

 

 

each of which may make it difficult for us to consummate our initial business combination.

 

In addition, we may have imposed upon us burdensome requirements, including:

 

 

compliance with which would reduce the funds we have available outside the trust account to consummate our initial business combination.

 

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in an initial business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities.” Our business will be to identify and consummate a business combination and thereafter to operate the acquired business or businesses for the long term. We do not plan to buy businesses with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or to be a passive investor. We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring, growing and businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. This offering is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earlier to occur of either: (i) the consummation of our primary business objective, which is a business combination; or (ii) absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our plan of liquidation. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expense for which we have not accounted.

 

Our directors, including those we expect to serve on our audit committee, may not be considered “independent” under the policies of the North American Securities Administrators Association, Inc., and, therefore, may take actions or incur expenses that are not deemed to be independently approved or independently determined to be in our best interest.

 

Under the policies of the North American Securities Administrators Association, Inc., an international organization devoted to investor protection, because all of our directors may receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on our behalf, such as attending meetings of the board of directors, identifying potential target businesses and performing due diligence on suitable

business combinations, and all of our directors, directly or indirectly, will own shares of our common stock prior to the completion of this offering, state securities administrators could take the position that such individuals are not “independent.” If this were the case, they would take the position that we would not have the benefit of independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement. There is no limit on the amount of out-of-pocket expenses that could be incurred, and there will be no review of the reasonableness of the expenses by anyone other than our board of directors, which would include persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. To the extent such out-of-pocket expenses exceed the sum of the available proceeds not deposited in the trust account and those proceeds properly withdrawable from the trust fund, such out-of-pocket expenses would not be reimbursed by us unless we consummate our initial business combination. Although we believe that all actions taken by our directors on our behalf will be in our best interests, whether or not they are deemed to be “independent,” we cannot assure you that this will actually be the case. If actions are taken or expenses are incurred that actually are not in our best interests, it could have a material adverse effect on our business, prospects and financial condition and performance and the price of our securities.

 

There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

 

Although we anticipate that our securities will be listed on the AMEX, as of the date of this prospectus there is currently no market for our securities. Investors therefore have no access to information about prior market history on which to base their investment decision. Even after listing on the AMEX, an active trading market for our securities may never develop or, if developed, it may not be sustained or be liquid. You may be unable to sell your securities unless a market can be established and sustained. The absence of a market for our securities will likely have an adverse effect on the price of our securities.

 

Compliance with the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, will require substantial financial and management resources and may increase the time and costs of completing an acquisition.

 

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls and requires that we have such system of internal controls audited beginning with our Annual Report on Form 10-K for the year ending November 30, 2009. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on the effectiveness of our system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the price of our securities.

 

Risks Related to the Financial Services Industry

 

Although we may pursue acquisition opportunities in other industries, we intend to focus initially on businesses in the financial services industry. Business combinations with entities with operations in the financial services industry entail special considerations and risks. If we are successful in completing our initial

business combination with a target business with operations in the financial services industry, we will be subject to, and possibly adversely affected by, the following risks:

 

The financial services industry faces substantial regulatory and litigation risks and conflicts of interest, and, after the consummation of our initial business combination with an entity in the financial services industry, we may face legal liability and reduced revenues and profitability if our services are not regarded as compliant or for other reasons.

 

The financial services industry is subject to extensive regulation. Many of the regulatory bodies with responsibility for the industry, including U.S. and other government agencies and self-regulatory organizations, as well as state securities commissions, insurance regulators and attorneys general, are empowered to conduct administrative proceedings and investigations that can result in, among other things, censures, fines, the issuance of cease-and-desist orders, prohibitions against engaging in some lines of business, suspension or termination of licenses or the suspension or expulsion of a broker-dealer, investment adviser or insurance distributor. The requirements imposed by regulators are designed to ensure the integrity of the financial markets and to protect customers, policyholders and other third parties who deal with financial services firms and are not designed to protect our stockholders. Regulations and investigations may result in limitations on our activities, such as the restrictions imposed on several leading securities firms as part of a settlement these firms reached with federal and state securities regulators and self-regulatory organizations in 2003 to resolve investigations into equity research analysts’ alleged conflicts of interest.

 

Banks domiciled or operating in the United States and their holding companies are subject to extensive regulation and supervision by applicable federal and state banking agencies. Many of these regulations are intended to protect parties other than stockholders, such as depositors. If we were to acquire a bank, these regulations may limit our operations significantly and control the methods by which we conduct our business, including our lending practices, capital structure, investment practices and dividend policy. In addition, banks and their holding companies generally are subject to rigorous capital requirements and may be examined on a regular basis for their general safety and soundness and compliance with various federal and state legal regimes, including, but not limited to, the Community Reinvestment Act, the Truth in Lending Act, the Equal Credit Opportunity Act, the Real Estate Settlement and Procedures Act, the Fair Credit Reporting Act and the Bank Secrecy Act, as amended by the USA PATRIOT Act. Failure to comply with these requirements or receive a satisfactory examination may subject a bank to informal or formal agreements, such as a memorandum of understanding, deferred prosecution agreement or cease-and-desist order, and may also result in the assessment of civil monetary penalties or the limitation of expansionary activities at both the bank and holding company levels. Outside the United States, banks and their stockholders are subject to similar extensive regulation and supervision relating to the conduct of business, capital requirements, safety and soundness and compliance.

 

Governmental and self-regulatory organizations, the Investment Dealers Association and the Mutual Fund Dealers Association, the SEC, FINRA and national securities exchanges such as the American Stock Exchange and the New York Stock Exchange, impose and enforce regulations on broker-dealers, investment banking firms, investment advisers and similar financial services companies. Self-regulatory organizations adopt rules, subject to approval by the SEC, that govern aspects of the financial services industry and conduct periodic examinations of the operations of registered investment dealers, broker-dealers and investment advisers. For example, U.S. broker-dealers are subject to rules and regulations that cover all aspects of the securities business, including: sales methods and trade practices; use and safekeeping of customer funds and securities; capital structures; recordkeeping; the preparation of research; the extension of credit; and the conduct of officers and employees. The types of regulations to which investment advisers are subject are also extensive and include: minimum capital requirements; recordkeeping; fee arrangements; client disclosure; custody of customer assets; and the conduct of officers and employees. Investment advisors and broker-dealers outside the United States are often subject to similar regulation and supervision.

 

The SEC, FINRA and various regulatory agencies also have stringent rules with respect to the maintenance of specific levels of net capital by securities brokerage firms. Failure to maintain the required net capital may subject a firm to suspension or revocation of registration by the SEC and suspension or expulsion

from Investment Dealers Association and FINRA and other regulatory bodies, which ultimately could prevent any broker-dealers that we acquire or acquire control of from performing as a broker-dealer. In addition, a change in the net capital rules, the imposition of new rules or any unusually large charge against net capital could limit the operations of broker-dealers, which could harm our business if we were to consummate our initial business combination with a securities brokerage firm. Similar capital requirements apply to insurance companies. For example, in the United States, under laws adopted by individual states, insurers engaged in certain lines of business are subject to risk based capital requirements. Insurers having less total adjusted capital than that required under the risk based capital laws are subject to varying degrees of regulatory action, depending on the level of capital inadequacy. Maintaining appropriate levels of statutory surplus is also considered important by state insurance regulatory authorities. Failure by an insurance company to maintain certain levels of statutory surplus could result in increased regulatory scrutiny and enforcement.

 

In addition, insurance companies are subject to extensive regulation and supervision in the jurisdictions in which they do business. For example, in the United States, state insurance departments have broad powers with respect to such things as: licensing companies to transact business; authorizing lines of business; imposing dividend limitations; licensing agents and distributors of insurance products; restricting companies’ ability to enter and exit markets; mandating certain insurance benefits; restricting companies’ ability to terminate or cancel coverage; requiring companies to provide certain types of coverage; regulating premium rates, including the ability to increase premium rates; approving policy forms; regulating trade, marketing, sales and claims practices; imposing privacy requirements; establishing reserve requirements and solvency standards; restricting certain transactions between affiliates; and regulating the type, amounts and valuation of investments.

 

In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against financial services firms has been increasing. After our initial business combination, our engagement agreements or arrangements may include provisions designed to limit our exposure to legal claims relating to our services, but these provisions may not protect us or may not be adhered to in all cases. We may also be subject to claims arising from disputes with employees for alleged discrimination or harassment, among other things. The risk of significant legal liability is often difficult to assess or quantify and its existence and magnitude often remain unknown for substantial periods of time. As a result, we may incur significant legal expenses in defending against litigation. Substantial legal liability or significant regulatory action against us could materially adversely affect our business, prospects, financial condition, liquidity, cash flows or results of operations or cause significant reputational harm to us, which could seriously harm our business.

 

Financial services firms are subject to numerous conflicts of interest or perceived conflicts of interest. We will need to adopt various policies, controls and procedures to address or limit actual or perceived conflicts and regularly seek to review and update our policies, controls and procedures. However, these policies, controls and procedures may result in increased costs, additional operational personnel and increased regulatory risk. Failure to adhere to these policies and procedures may result in regulatory sanctions or client litigation. There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years, and we run the risk that employee misconduct could occur. It is not always possible to deter or prevent employee misconduct and the precautions we take to prevent and detect this activity may not be effective in all cases.

 

If we consummate our initial business combination in the financial services industry, we will face strong competition from financial services firms, many of whom have the ability to offer clients a wider range of products and services than we may be able to offer, which could lead to pricing pressures that could materially adversely affect our revenue and profitability.

 

If we consummate our initial business combination in the financial services industry, we will compete with other firms — both domestic and foreign — on a number of factors, including the quality of our employees, transaction execution, our products and services, innovation, reputation and price. We may fail to attract new business and we may lose clients if, among other reasons, we are not able to compete effectively. We will also face significant competition as result of a recent trend toward consolidation in these industries. In

the past several years, there has been substantial consolidation and convergence among companies in the financial services industry. In particular, since the passage of the Gramm-Leach-Bliley Act in 1999, which reduced barriers to banks providing a wide range of financial services, a number of large commercial banks, insurance companies and other broad-based financial services firms have established or acquired broker-dealers or have merged with other financial institutions. Many of these firms have the ability to offer a wide range of products such as loans, deposit-taking and insurance, brokerage, investment management and investment banking services, which may enhance their competitive position. They also have the ability to support investment banking with commercial banking, insurance and other financial services revenue in an effort to gain market share, which could result in pricing pressure on other businesses. We believe, in light of increasing industry consolidation and the regulatory overhaul of the financial services industry, that competition will continue to increase from providers of financial services products.

 

The financial services industry has inherent risks, which may affect our net income and revenues.

 

The financial services industry is, by its nature, subject to numerous and substantial risks, including volatile trading markets and fluctuations in the volume of market activity. Consequently, our net income and revenues are likely to be subject to wide fluctuations, reflecting the effects of many factors, including:

 

 

These and other factors could affect the stability and liquidity of securities and futures markets, and the ability of issuers, other securities firms and counterparties to perform their obligations.

 

In particular, if we consummate our initial business combination with an investment management firm, our business could be expected to generate lower revenue in a market or general economic downturn. Under a typical arrangement for an investment management business, the investment advisory fees we could receive would be based on the market value of the assets under management. Accordingly, a decline in the prices of securities would be expected to cause our revenue and income to decline by:

 

 

 

Operational risks may disrupt our business, result in regulatory action against us or limit our growth.

 

Financial services businesses are dependent on communications and information systems, including those of vendors. Any failure or interruption of these systems, whether caused by fire, other natural disaster, power or telecommunications failure, act of terrorism or war or otherwise, could materially adversely affect operating results. After the consummation of our initial business combination, we will need to continue to make investments in new and enhanced information systems. Interruption or loss of our information processing capabilities or adverse consequences from implementing new or enhanced systems could have a material adverse effect on our business and the price of our common stock and warrants. As our information system providers revise and upgrade their hardware, software and equipment technology, we may encounter difficulties in integrating these new technologies into our business. Additionally, our systems may be subject to infiltration by unauthorized persons. If our systems or facilities were infiltrated and damaged by unauthorized persons, our clients could experience data loss, financial loss and significant business interruption. If that were to occur, it could have a material adverse effect on our business, financial condition and results of operations.

 

Many financial services firms face credit risks which, if not properly managed, could cause revenues and net income to decrease.

 

Many types of financial services firms, including banks and broker-dealers, lend funds to their customers. Among the risks all lenders face is the risk that some of their borrowers will not repay their loans. The ability of borrowers to repay their obligations may be adversely affected by factors beyond our control, including local and general economic and market conditions. A substantial portion of the loans may be secured by liens on real estate or securities. These same factors may adversely affect the value of real estate and securities as collateral. If we enter into our initial business combination with a firm that makes loans, we would maintain an allowance for loan losses to reflect the level of losses determined by management to be inherent in the loan portfolio. However, the level of the allowance and the amount of the provisions would only be estimates based on management’s judgment and regulatory guidance, and actual losses incurred could materially exceed the amount of the allowance or require substantial additional provisions to the allowance, either of which would likely have a material adverse effect on our revenues and net income.

 

The statements contained in this prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about our:

 

 

 

 

The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

We estimate that the net proceeds of this offering and the proceeds from the sale of the private placement warrants will be used as set forth in the following table:

 

 

 

 

 

After estimated non-deferred expenses of this offering and the private placement, $245,787,935 (or $281,975,435 if the underwriters’ over-allotment option is exercised in full) will be placed in a trust account maintained by American Stock Transfer & Trust Company, acting as trustee. Except for payment of taxes and interest income earned, after taxes payable, on the trust account of up to $3,250,000 (subject to adjustment in the case of an increase in the size of this offering or if the underwriters exercise their over-allotment option), to fund our working capital requirements, the proceeds will not be released from the trust account until the earlier of the consummation of our initial business combination or our liquidation. All remaining proceeds held in the trust account, including interest income earned (after taxes payable) on the trust account, will be available for use in consummating our initial business combination and for payment of the deferred underwriting discounts and commissions or will be released to public stockholders upon exercise of their conversion rights or to public stockholders entitled to receive liquidating distributions upon our liquidation (after payment or provision for our then existing and estimated future liabilities), as the case may be. We may not use all of the funds remaining in the trust account in connection with our initial business combination (and related conversion rights), either because the consideration for the initial business combination is less than the proceeds in the trust account or because we finance a portion of the consideration with our equity or debt securities or other borrowings. In that event, the remaining proceeds held in the trust account will constitute working capital for our business after our initial business combination.

 

We have allocated $250,000 of the net proceeds from this offering and proceeds from the sale of the private placement warrants to fund a portion of our working capital. We intend to fund the majority of our working capital requirements from a portion of the interest income earned (after taxes payable) on the trust account. Under the terms of the investment management trust agreement, up to $3,250,000, subject to adjustment, of interest income, after taxes payable, may be released to us in such amounts and at such intervals as we request, subject to availability. Although we do not know the rate of interest to be earned on the trust account and are unable to predict an exact amount of time it will take to complete an initial business combination, we believe that following the completion of this offering, it will take some time to find a prospective target business and take all of the steps necessary to complete an initial business combination. We anticipate that the interest that will accrue on the trust account during the time it will take to identify a target and complete an acquisition will be sufficient to fund our working capital requirements. However, if interest payments are not sufficient to fund these requirements, or are not available to fund the expenses at the time we incur them, we may be required to seek loans or additional investments from our executive officers, directors or existing holders or from third parties. However, none of our executive officers, directors or existing holders or any third party is under any obligation to advance funds to us or to invest in us in such circumstances.

 

If we determine that the size of this offering should be increased or the underwriters exercise their over-allotment option, the amount of interest we may withdraw from the trust account to fund our working capital will be increased proportionately. If the underwriters exercise their over-allotment option in full, the amount per share held in the trust account will be reduced from approximately $9.83 to approximately $9.81. In addition, assuming a 20% increase in the size of this offering, the per-share conversion or liquidation price could decrease further by as much as approximately $0.03.

 

Our operating expenses prior to our initial business combination will include, but not be limited to, deposits or down payments for a proposed initial business combination, legal, accounting and other expenses, including due diligence expenses and reimbursement of out-of-pocket expenses incurred in connection with the investigation, structuring and negotiation of our initial business combination, director and officer liability insurance premiums and reserves, legal and accounting fees relating to SEC reporting obligations, brokers’ retainer fees, consulting fees and finder’s fees. We expect that due diligence of prospective target businesses will be performed by some or all of our executive officers and directors and KBW employees, and also that it may include engaging law firms, accounting firms or other third-party consultants. No compensation of any kind (including finder’s and consulting fees) will be paid to any of our executive officers or directors, or any of our or their affiliates, for services rendered to us prior to or in connection with the consummation of our initial business combination, including in connection with such due diligence activities. However, our executive officers and directors and employees of KBW will receive reimbursement for any out-of-pocket expenses (such as travel expenses) incurred by them in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on a suitable initial business combination, and KBW, Inc. will be entitled to receive payments of an aggregate of $10,000 per month for office space, secretarial and administrative services. We believe that, based on rents and fees for similar services in the City of New York, the fees charged by KBW, Inc. are at least as favorable as we could have obtained from unaffiliated third parties. All payments made to our executive officers, directors and existing holders and our or their affiliates, other than the $10,000 per month payment described above, and any payments made to members of our audit committee must be reviewed and approved by a majority of our disinterested directors.

 

While it is difficult to determine what the specific operating expenses of our business after consummation of our initial business combination may be, we expect that they may include some or all of the following: capital expenditures, general ongoing expenses, including overhead, payroll, legal and accounting costs and the costs of developing, producing and marketing products and services. In addition, we may use any remaining proceeds held in the trust account to satisfy any unpaid reimbursable out-of-pocket expenses incurred by our executive officers and directors and employees of KBW, as well as any unpaid finder’s fees or similar fees or compensation, to the extent such expenses, fees or compensation exceed the sum of the available proceeds not deposited in the trust account and proceeds properly withdrawable by us from the trust account.

 

In addition, it is also possible that we could use a portion of the funds not in the trust account to pay finder’s fees, consulting fees or other similar compensation, or make a deposit or down payment or fund a “no-shop” provision with respect to a particular proposed initial business combination, although we do not have any current intention to do so. In the event that we were ultimately required to pay or forfeit such funds (whether as a result of our breach of the agreement relating to such payment or otherwise), if the amount were large enough and we had already used up the other funds available to us, we could be left with insufficient funds to continue searching for other potential target businesses or otherwise fund our business. In such case, if we were unable to secure additional financing, we would most likely fail to consummate an initial business combination in the allotted time and be forced to liquidate.

 

We believe that amounts not held in the trust account as well as the interest income earned (after taxes payable) on the trust account of up to $3,250,000, subject to adjustment, that may be released to us will be sufficient to pay our costs prior to, and in connection with, our initial business combination as contemplated herein. This belief is based on the fact that in-depth due diligence will most likely be undertaken only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of our initial business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount of such costs, we may be required to raise additional capital, the availability, amount and cost of which is currently unascertainable and cannot be assured. To the extent that such costs exceed the amounts not held in the trust account and the interest income earned (after taxes payable) on the trust account of up to $3,250,000, subject to adjustment, that may be released to us from the trust account, such costs may not be reimbursed by us unless and until we consummate an initial business combination. The role of our executive officers and directors after an initial business combination is uncertain and we have no current ability to determine what remuneration, if any, will be paid to our executive officers and directors after our initial business combination. Our executive officers and

directors may, as part of any such business combination, negotiate the repayment of some or all of the costs incurred by them that have not been reimbursed by us prior to the initial business combination’s closing. If the target business’s owners do not agree to such repayment, this could cause our executive officers and directors to view such potential initial business combination unfavorably and result in a conflict of interest.

 

If we do not have sufficient funds available to cover our costs, we may be required to seek additional financing from our executive officers, our directors, our existing holders or third parties. We may not be able to obtain additional financing on favorable terms, or at all, and no party, including our executive officers, our directors, our existing holders or third parties, is obligated to provide any additional financing to us. If we fail to obtain the necessary additional financing, we may be required to liquidate prior to consummating our initial business combination.

 

KBW, Inc. has loaned $200,000 to us for the payment of offering expenses. The loan is interest free and payable on the earlier of the completion of this offering or December 9, 2008.

 

The net proceeds of this offering and the proceeds from the sale of the private placement warrants that are not immediately required for the purposes set forth above, as well as deferred underwriting discounts and commissions, will be held in the trust account and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act.

 

Other than (i) the repayment of the $200,000 loan described above and (ii) administrative fees relating to office space and administrative services provided to us, no compensation of any kind, including finder’s and consulting fees, will be paid to any of our executive officers, directors or existing holders or any of their respective affiliates prior to or in connection with the initial business combination. However, our executive officers, directors and employees of KBW may receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations.

 

A public stockholder will be entitled to receive funds from the trust account, including interest income earned on their pro rata portion of the funds in the trust account (after taxes payable and after release of up to $3,250,000, subject to adjustment, of interest income earned, after taxes payable, to fund our working capital requirements, including the costs of our liquidation, and after payment of or provision for our then existing and estimated future liabilities in the case of a liquidation) only in the event of our liquidation upon our failure to consummate our initial business combination meeting the criteria described herein within the required 24-month period or if a public stockholder were to seek to convert shares of our common stock into cash in connection with our initial business combination that the public stockholder voted against and which we actually consummate (except as limited under “Risk Factors — Risks Relating to our Company and the Offering — Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a group, will be restricted from seeking conversion rights with respect to more than 10% of the shares of common stock included in the units being sold in this offering”). In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account.

 

We have not paid any dividends on our common stock to date. Prior to consummating our initial business combination, which is subject to approval by our public stockholders, substantially all of our earnings will consist of interest income earned on funds in the trust account that are required to be held therein until consummation of our initial business combination or our liquidation, except as set forth in the next sentence. Both (i) interest income earned on the trust account balance to pay any income taxes on such interest income and (ii) interest income earned, after taxes payable, on the trust account of up to $3,250,000 (subject to adjustment in the case of an increase in the size of this offering or if the underwriters exercise their over-allotment option), to fund our working capital requirements, including, in such an event, the costs of our liquidation may be released to us from the trust account. Accordingly, our board of directors does not anticipate declaring any dividends on our common stock in the foreseeable future. The payment of dividends, if any, after our initial business combination will be contingent upon our historical and anticipated financial condition, revenues, if any, earnings, if any, liquidity and cash flows, if any, capital and tax requirements, contractual prohibitions and limitations and applicable law and will be within the sole discretion of our board of directors.

 

The difference between the public offering price per share of common stock, assuming no value is attributed to the warrants included in the units, and the pro forma net tangible book value per share of our common stock after this offering and the sale of the private placement warrants constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of common stock that may be converted into cash), by the number of outstanding shares of our common stock. The information below assumes the payment in full of the underwriting discount and commissions, including amounts held in the trust account, no exercise of the underwriters’ over-allotment option and a corresponding forfeiture of 937,500 initial units by our existing holders.

 

As of December 17, 2007, our net tangible book value was a deficiency of $(180,550), or approximately $(0.03) per share of common stock. After giving effect to the sale of 25,000,000 shares of common stock included in the units (but excluding shares of common stock issuable upon exercise of the warrants included in the units) in this offering and the sale of the private placement warrants, and the deduction of underwriting discounts and commissions and estimated expenses of this offering, our pro forma net tangible book value (as decreased by the value of 7,499,999 shares of common stock which may be converted into cash) as of December 17, 2007 would have been $163,576,014 or approximately $6.89 per share, representing an immediate increase in net tangible book value of approximately $6.92 per share to our existing holders and an immediate decrease in net tangible book value of approximately $3.11 per share or approximately 31.1% to new investors not exercising their conversion rights.

 

The following table illustrates the dilution to the new investors on a per share basis, assuming no value is attributed to the warrants included in the units:

 

The pro forma net tangible book value per share after this offering and the sale of the private placement warrants is calculated as follows:

 

 

 

 

The following table sets forth information with respect to our initial holder and the public stockholders:

 

 

 

 

The following table sets forth our capitalization on:

 

 

 

 

 

 

 

 

Overview

 

We are a blank check company formed under the laws of the State of Delaware on December 6, 2007 for the purpose of acquiring one or more businesses, or a portion of such business or businesses, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination. We intend to focus initially on businesses in the financial services industry, but we may pursue opportunities in other industries. Our search will be primarily focused on businesses in North America and Europe, but we may explore opportunities in other geographic regions. We do not have any specific business combination under current consideration or contemplation and we have not, nor has anyone on our behalf, contacted, or been contacted by, any potential target businesses or had any discussions, formal or otherwise, with respect to a business combination or taken any direct or indirect measures to locate a specific target business or consummate a business combination. We intend to effect a business combination using cash from the net proceeds of this offering and the proceeds from the sale of the private placement warrants, the issuance of additional equity, proceeds from the incurrence of debt or a combination of cash, stock and debt.

 

The issuance of additional equity or the incurrence of debt could have material consequences on our business, prospects, financial condition, liquidity and results of operations. Our issuance of additional equity (including, upon conversion of convertible debt securities) may:

 

 

Similarly, our incurrence of debt may:

 

 

 

 

 

Results of Operations and Known Trends or Future Events

 

We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception has been to issue the initial units and to prepare for our proposed fundraising through this offering and the sale of the private placement warrants that will occur immediately prior to the completion of this offering. Following this offering, we will not generate any operating revenues until after consummation of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. Immediately after the offering, we will begin paying monthly fees of $10,000 per month to KBW, Inc. for office space and administrative services and expect to incur substantially increased expenses after this offering as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses in connection with the pursuit of our initial business combination.

 

Liquidity and Capital Resources

 

Our liquidity needs have been satisfied to date through receipt of $25,000 in subscriptions for the initial units from our initial holder and a loan of $200,000 from KBW, Inc. as more fully described herein.

 

We estimate that the net proceeds from the sale of the units in this offering and the sale of the private placement warrants in the private placement will be $237,287,935 (or $272,162,935 if the underwriters’ over-allotment option is exercised in full), after deducting offering expenses of approximately $712,065 and underwriting discounts and commissions of approximately $17,500,000 (or $20,125,000 if the underwriters’ over-allotment option is exercised in full). As a result of the deferral of underwriting discounts and commissions of $8,750,000 (or $10,062,500 if the underwriters’ over-allotment option is exercised in full), $245,787,935 (or $281,975,435 if the underwriters’ over-allotment is exercised in full) will be held in the trust account and $250,000 will not be held in the trust account. Funds not held in the trust account and interest income earned (after taxes payable) on the trust account of up to $3,250,000, subject to adjustment as described below, will be used by us to fund our working capital requirements. If we consummate our initial business combination, we will use $8,750,000 (or $10,062,500 if the underwriters’ over-allotment option is exercised in full) of the net proceeds held in the trust account to pay the deferred underwriting discounts and commissions (subject to a $0.35 per share reduction for public stockholders who exercise their conversion rights). All the remaining net proceeds of this offering and the proceeds from the sale of the private placement warrants in the trust account, after the payment of deferred underwriting discounts and commissions, including interest income earned (after taxes payable) on the trust account, will be available for use in consummating our initial business combination or will be released to public stockholders upon exercise of their conversion rights or to public stockholders entitled to receive liquidating distributions upon our liquidation (after payment of or provision for our then existing and estimated future liabilities), as the case may be. We may not use all of the proceeds in the trust account in connection with our initial business combination (and related conversion rights), either because the consideration for the initial business combination is less than the proceeds in a trust account or because we finance a portion of the consideration with our equity or debt. In that event, the proceeds held in the trust account, as well as proceeds held outside the trust account that have not been expended, will be used to finance the operations of the combined business or businesses and for other general corporate purposes.

 

We have allocated $250,000 of the net proceeds from this offering and the proceeds from the sale of the private placement warrants to fund a portion of our working capital. We intend to fund the majority of our working capital requirements from a portion of the interest income earned (after taxes payable) on the trust account. Under the terms of the investment management trust agreement, up to $3,250,000, subject to adjustment, of interest income, subject to adjustment, after taxes payable, may be released to us in such amounts and at such intervals as we request, subject to availability. Although we do not know the rate of interest to be earned on the trust account and are unable to predict an exact amount of time it will take to

complete an initial business combination, we believe that following the completion of this offering it will take some time to find a prospective target and take all of the steps necessary to complete an initial business combination. We anticipate that the interest that will accrue on the trust account during the time it will take to identify a target and complete an acquisition will be sufficient to fund our working capital requirements. However, if interest payments are not sufficient to fund these requirements, or are not available to fund the expenses at the time we incur them, we may be required to seek loans or additional investments from our executive officers, directors or existing holders or from third parties. However, none of our executive officers, directors or existing holders or any third parties are under any obligation to advance funds to us or to invest in us in such circumstances.

 

If we determine that the size of this offering should be increased or the underwriters elect to exercise their over-allotment option, the amount of interest income we may withdraw from the trust account to fund our working capital will be increased proportionately. If the underwriters exercise their over-allotment option in full, the amount per share sold in this offering and held in trust will be reduced from approximately $9.83 to approximately $9.81. In addition, assuming a 20% increase in the size of this offering and no exercise of the underwriters’ over-allotment option, the per share conversion or liquidation price could decrease further by as much as approximately $0.03 per share.

 

Our operating expenses prior to our initial business combination will include, but not be limited to, deposits or down payments for a proposed initial business combination, legal, accounting and other expenses, including due diligence expenses and reimbursement of out-of-pocket expenses incurred in connection with the investigation, structuring and negotiation of our initial business combination, director and officer liability insurance premiums and reserves, legal and accounting fees relating to SEC reporting obligations, brokers’ retainer fees, consulting fees and finder’s fees. We expect that due diligence of prospective target businesses will be performed by some or all of our executive officers and directors and KBW employees, and also that it may include engaging law firms, accounting firms or other third-party consultants. No compensation of any kind (including finder’s and consulting fees) will be paid to any of our executive officers or directors, or any of our or their affiliates, for services rendered to us prior to or in connection with the consummation of our initial business combination, including in connection with such due diligence activities. However, our executive officers and directors and employees of KBW will receive reimbursement for any out-of-pocket expenses (such as travel expenses) incurred by them in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on a suitable initial business combination, and KBW, Inc. will be entitled to receive payments of an aggregate of $10,000 per month for office space and administrative services. We believe that, based on rents and fees for similar services in the City of New York, the fees charged by KBW, Inc. are at least as favorable as we could have obtained from unaffiliated third parties. All payments made to our existing holders, executive officers and directors and our or their affiliates, other than the $10,000 per month payment described above, and any payments made to members of our audit committee, must be reviewed and approved by a majority of our disinterested directors.

 

We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business prior to our initial business combination. However, we are relying on interest income earned (after taxes payable) on the trust account of up to $3,250,000, subject to adjustment, to fund such expenditures, and to the extent that the interest income earned is below our expectation, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we will need to raise additional funds through the incurrence of debt or the issuance of additional equity if we become obligated to convert into cash a significant number of shares from dissenting stockholders. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of a business combination.

 

Our initial business combination must be with one or more businesses, or a portion of such business or businesses, whose fair market value, individually or collectively, is equal to at least 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business consummation. Accordingly, prior to 24 months following the completion of this offering, we will seek to consummate our initial business combination with a business or businesses whose fair market value is equal to at least approximately $189,630,348, assuming no exercise of the underwriters’ over-allotment option.

We believe that our available working capital following this offering, together with the issuance of additional equity and/or the incurrence of debt, would support the acquisition of such a target business. Such debt may take the form of a working capital or long-term debt facility, high-yield or convertible notes or mezzanine debt financing and, depending upon the business of the target entity, inventory, receivable or other secured asset-based financing. However, there can be no assurance that we will be able to obtain additional funds through equity or debt financings on favorable terms or at all. The mix of additional equity and/or debt would depend on many factors. The proposed funding for any such business combination would be disclosed in the proxy statement relating to the required stockholder approval. We would only consummate such financing simultaneously with the consummation of our initial business combination. We will only seek stockholder approval of such financing as an item separate and apart from the approval of the overall transaction if such separate approval was required by applicable securities laws or the rules of the AMEX or other applicable securities exchange.

 

Related Party Transactions

 

On December 13, 2007, KBW, Inc. purchased 7,187,500 of our units from us for an aggregate purchase price of $25,000 in cash, or approximately $0.003 per unit, in a private placement. In January 2008, employee holders purchased 1,359,091 shares of our common stock from KBW, Inc. at cost. Additionally, each of our directors will purchase 60,000 shares of our common stock directly from KBW, Inc. prior to this offering at cost.

 

KBW, Inc. and the employee holders have agreed to purchase from us, in a private placement that will occur immediately prior to the closing of this offering, an aggregate of 5,500,000 warrants at a price of $1.00 per warrant for an aggregate purchase price of $5,500,000. The proceeds from the sale of the private placement warrants approximates their fair value. The closings of this offering and the private placement are conditional upon each other. The aggregate proceeds from the sale of the private placement warrants will be added to the net proceeds from this offering (excluding $250,000 in working capital) and held in the trust account (subject to certain permitted withdrawals) pending the consummation of our initial business combination. If we do not consummate a business combination that meets the criteria described in this prospectus within 24 months following completion of this offering, then the proceeds from the sale of private placement warrants will become part of the liquidating distribution to be made on a pro rata basis to our public stockholders.

 

The private placement warrants to be purchased will be identical to the warrants included in the units being sold in this offering, except that the private placement warrants (1) will be exercisable at the option of the holder on a cashless basis so long as they are held by the original purchaser or its permitted transferees and (2) are not subject to redemption by us. Exercising warrants on a “cashless basis” means that in lieu of paying the aggregate exercise price for the shares of common stock being purchased upon exercise of the warrant in cash, the holder will forfeit a number of shares underlying the warrants with a fair market value equal to such aggregate exercise price. Accordingly, we would issue fewer shares upon exercise and would not receive any proceeds to the extent the private placement warrants are exercised on a cashless basis. Warrants included in the units being sold in this offering are not exercisable at the option of the holder on a cashless basis, unless we require cashless exercise in connection with a call for redemption of those warrants. As a result, we will be required to issue the total number of shares of common stock underlying any exercised warrants included in the units being sold in this offering and the exercise price with respect to such warrants will be paid in cash directly to us, provided that in connection with a call for redemption of the warrants, we may require all holders who wish to exercise their warrants to do so on a cashless basis.

 

If warrants included in the units being sold in this offering are redeemed and the market price of a share of our common stock rises following such redemption, the holders of the private placement warrants, could potentially realize a larger gain on exercise or sale of their private placement warrants than would be available absent such warrant redemption, although we do not know if the price of our common stock would increase following warrant redemption. If our share price declines in periods subsequent to a warrant redemption and the holders continue to hold their private placement warrants, the value of their private placement warrants may also decline.

 

The private placement warrants will not be exercisable at any time when a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective or a current prospectus is not available. KBW, Inc. and the employee holders have agreed that the private placement warrants will not be sold or transferred until after we have consummated our initial business combination, without the prior written consent of Banc of America Securities LLC; provided, however, that transfers can be made to permitted transferees who agree in writing to be bound by such transfer restrictions. In addition, KBW, Inc. and the employee holders and their permitted transferees will be permitted to transfer their private placement warrants in the event of a merger, capital stock exchange, stock purchase, asset acquisition or other similar transaction which results in all of our stockholders having the right to exchange their shares of our common stock or other securities for cash, securities or other property subsequent to our consummation of our initial business combination. For so long as the private placement warrants are subject to transfer restrictions, they will be held in an escrow account maintained by American Stock Transfer & Trust Company. No commissions, fees or other compensation will be payable by us in connection with the sale of the private placement warrants.

 

Holders of the initial securities, the private placement warrants and any shares of common stock issuable upon exercise of the initial warrants or the private placement warrants are entitled to certain registration rights. Please see “Description of Securities — Registration Rights” for further information concerning these registration rights.

 

KBW, Inc. has made us an interest-free loan of $200,000 for the payment of offering expenses. The loan is payable on the earlier of the completion of this offering or December 9, 2008. Please see “Certain Relationships and Related Transactions” for further information concerning this loan. Additionally, we will pay KBW, Inc. a monthly fee of $10,000 for general and administrative services, including office space, utilities and secretarial support from the completion of this offering until the earlier of our consummation of a business combination or our liquidation. We believe that, based on rents and fees for similar services in the City of New York, the fees charged by KBW, Inc. are at least as favorable as we could have obtained from unaffiliated third parties.

 

Controls and Procedures

 

We do not currently, and are not currently required to, evaluate the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We will be required to evaluate the effectiveness of our internal control over financial reporting for the fiscal year ending November 30, 2009. As of the date of this prospectus, we have not completed an assessment, nor have our auditors tested our systems, of internal control over financial reporting. We expect that we will assess the internal control over financial reporting of our target business or businesses preceding the consummation of a business combination and will then adopt a schedule for implementation and testing of such additional controls as we may determine are required to make an assessment that we maintain an effective system of internal control over financial reporting. A target business may not have been, or may not be, in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of its internal control over financial reporting. Small and mid-sized target businesses which we may consider for a business combination may have internal control over financial reporting that need improvement in areas such as:

 

 

Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting

responsibilities, particularly in the areas of designing, enhancing or remediating internal control over financial reporting and disclosure controls and procedures. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financial reporting.

 

In connection with our management’s report on internal control over financial reporting, we will retain our independent auditors to assess management’s report on internal control over financial reporting and to render its own opinion on such internal controls when required by Section 404 of the Sarbanes-Oxley Act. Additional matters concerning a target business’s internal control over financial reporting may be identified in the future when the assessment and testing is performed.

 

Quantitative and Qualitative Disclosures about Market Risk

 

The net proceeds of this offering and the proceeds from the sale of the private placement warrants, including amounts in the trust account, will be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

 

Off-balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

 

As of December 17, 2007, we did not have any off-balance sheet arrangements within the meaning of Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations of the types contemplated by Item 303(a)(5) of Regulation S-K, other than as referred to in our financial statements and notes thereto. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.

 

Introduction

 

We are a blank check company formed under the laws of the State of Delaware on December 6, 2007 for the purpose of acquiring one or more businesses, or a portion of such business or businesses, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination. We intend to focus initially on businesses in the financial services industry, but we may pursue opportunities in other industries. Our search will be primarily focused on businesses in North America and Europe, but we may explore opportunities in other geographic regions.

 

We do not have any specific business combination under consideration or contemplation and we have not, nor has anyone on our behalf, contacted, or been contacted by, any potential target business or had any discussions, formal or otherwise, with respect to a business combination or taken any direct or indirect measures to locate a specific target business or consummate a business combination. To date, our efforts have been limited solely to organizational activities, including the issuance of 7,187,500 units to our initial holder for an aggregate purchase price of $25,000, or approximately $0.003 per unit, and activities related to this offering.

 

Our Sponsor

 

Our sponsor, KBW, Inc., is a leading full-service investment bank specializing exclusively in the financial services industry. Founded in 1962, KBW has been committed to the financial services industry with a focus on depository institutions, insurance companies, broker/dealers, asset management companies, real estate investment trusts and specialty finance firms. KBW’s commitment to this large and growing industry has enabled the firm to build long-term relationships and become well-known as a trusted advisor to its corporate clients and a valuable resource for its institutional investor clients. KBW has built a reputation for excellence on the basis of its experienced senior professionals, its leading research platform and the strength of its execution capabilities. On November 9, 2006, KBW, Inc. became a public company, with its shares of common stock trading on the NYSE under the ticker symbol “KBW.” Its principal activities are:

 

 

 

 

 

We were organized by KBW, Inc. because it perceives our company as an attractive investment opportunity for KBW and its stockholders. KBW has become increasingly involved in private equity investing through KBW Capital Partners I, a private equity fund that makes investments in financial institutions and related entities. KBW believes that our formation and this offering will enable it to benefit as an investor from acquisition opportunities that are not strategic to it or that arise in the ordinary course of its business.

 

Competitive Advantages

 

Management Expertise

 

We will seek to capitalize on the significant expertise and relationships of KBW and our management team, including our Chairman and Director, Mr. John G. Duffy, our Chief Executive Officer and Director, Mr. Peter E. Roth and our Director, Mr. Andrew M. Senchak, who collectively represent more than 75 years of financial services industry expertise.

 

Mr. Duffy began his career with KBW 29 years ago and was appointed Chairman and Chief Executive Officer of KBW in 2001. Under his leadership, KBW has tripled its employee base, expanded its presence internationally with the addition of a London office to cover the U.K. and European markets and completed an initial public offering, generating $143 million in gross proceeds in November 2006. As of September 30, 2007, KBW had $440 million in capital compared to approximately $120 million in 2001. Prior to 2001, Mr. Duffy was Co-Chairman and Executive Vice President in charge of KBW’s Corporate Finance Department where he managed KBW’s investment banking professionals in New York and across KBW’s regional U.S. offices. Mr. Duffy began his career at KBW in 1978 as manager in charge of its Bank Watch Department evaluating credit ratings for banks nationwide and continues to remain actively involved in the analysis of financial institutions and KBW’s advisory business.

 

Mr. Roth has over 25 years of experience advising on mergers, acquisitions and restructurings, as well as sourcing, evaluating and structuring transactions across many sectors of the financial services industry. Mr. Roth has served in leadership positions managing teams of investment and banking professionals for more than 17 years. He currently serves as Chief Executive Officer of KBW Asset Management and as a member of the Investment Committee of KBW Capital Partners I, a private equity fund focused on the financial services industry. Previously, Mr. Roth served as KBW’s Head of Insurance Investment Banking where he successfully led a team that advised on approximately 80 mergers and acquisitions advisory and capital markets transactions from 2003 to 2006. Prior to joining KBW, Mr. Roth served as Head of U.S. Investment Banking at Fox-Pitt, Kelton for 13 years focusing on advisory and capital raising services for a wide range of financial institutions in the U.S. and Europe.

 

Mr. Senchak has been with KBW for more than 20 years. He joined the firm’s investment banking division in 1985 and became Head of Investment Banking in 1997. Mr. Senchak currently serves as Vice Chairman and President of KBW, Inc. and Co-Head of Investment Banking for Keefe, Bruyette & Woods, Inc. where he oversees the firm’s Corporate Finance practice, which includes mergers and acquisitions, recapitalizations, restructurings and capital markets transactions. Under his leadership, KBW has grown to become a leading mergers and acquisitions advisor in the banking industry, as measured by deal volume. Mr. Senchak leads a team of approximately 100 investment banking professionals across KBW’s U.S. offices that have advised on transactions such as Bank of America’s $36 billion acquisition of MBNA in 2005, North Fork’s $15 billion sale to Capital One in 2006 and Toronto-Dominion Bank’s $8.5 billion acquisition of Commerce Bancorp in 2007. Mr. Senchak taught as a professor of Economics at Rutgers University prior to joining KBW.

 

Access to KBW’s Network, Resources and Intellectual Capital

 

We believe that our access to KBW’s extensive industry network, strong client and investor relationships, analytical resources and intellectual capital will be the cornerstone of our ability to successfully identify and consummate our initial business combination.

 

We believe that our ability to source business combination opportunities will benefit from the extensive reach of KBW’s network. We will have access to more than 250 managing directors, principals and other

senior professionals employed across KBW’s investment banking, research, sales and trading and asset management divisions in New York, London, San Francisco, Boston, Chicago, Atlanta and five additional regional offices in the U.S. In addition to its broad geographic presence, KBW reaches out to clients in many ways, from its publication of periodic research reports to the sponsorship of numerous client events each year, showcasing financial services industry executives to colleagues and institutional investors.

 

We also believe that we will be able to leverage KBW’s strong client relationships and position as a trusted advisor to source and consummate a business combination. KBW is a leading mergers and acquisitions advisor in the banking industry in terms of deal volume, as well as a leader in debt and financings and balance sheet restructuring for financial services companies and a specialist in mutual thrift and insurance company conversions.

 

As a leading mergers, acquisitions and restructuring advisor in the financial services industry, KBW offers enhanced access to potential target businesses, as well as the resources and analytical tools to evaluate such companies. Because of its industry focus, the resources that KBW devotes to the financial services industry rival those of the bulge bracket investment banks. KBW embraces the latest technology and motivates its employees to be entrepreneurial and innovative.

 

KBW is committed to attracting and retaining exceptional talent and is staffed with experienced professionals distinguished by their expertise in the financial services industry. The experience of KBW’s professionals, coupled with their extensive long-term relationships, enables KBW to provide unique perspectives to clients as they face complex strategic decisions and, we believe, will enhance our ability to source potential acquisition candidates and evaluate their attractiveness. Furthermore, where appropriate, KBW’s managing directors and senior advisors will be available to offer us valuable advice on transaction structuring and other matters.

 

Strong Alignment of Interests between KBW’s Employees and Investors

 

KBW’s network of more than 250 managing directors, principals and senior professionals, based in ten U.S. cities and London, will serve as additional resources to us as we pursue acquisition candidates. We believe that these employees will be motivated to identify a target for us, in part, because of their ownership in KBW, Inc. and also because their annual discretionary bonus compensation has historically been largely tied to their contribution of revenues to KBW. We believe that any increase in the fair market value of our securities as a result of a successful initial business combination would constitute an increase in revenue to our sponsor, KBW, Inc. We believe that the revenue-driven compensation structure for KBW’s managing directors, principals and senior professionals, combined with KBW, Inc.’s indirect ownership interests in us, will motivate them to facilitate our efforts in sourcing a target for our initial business combination. KBW employees will not be granted any other awards or incentives, such as a finders’ fee, by us for their efforts to facilitate our efforts in sourcing a target for our initial business combination.

 

Status as a Public Company

 

We believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to a traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would typically sell the target business for cash, shares of our common stock or for a combination of shares of our common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. The consideration for a business combination might also include the assumption, repayment or refinancing of indebtedness of a target company. Although there are various costs and obligations associated with being a public company, we believe target businesses will find this a more certain and cost effective method to becoming a public company than a traditional initial public offering. In a traditional initial public offering, there are additional expenses incurred in marketing, roadshow and public reporting efforts that will likely not be present to the same extent in connection with a business combination with us.

 

Furthermore, once a proposed business combination is approved by our stockholders and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is

always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests than it would have as a privately-held company. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.

 

Financial Position

 

With a trust account initially in the amount of approximately $237,037,935 (assuming no exercise of the underwriters’ over-allotment option), excluding deferred underwriting discounts and commissions, we offer a target business a variety of options such as providing the owners of a target business with shares of common stock in a public company and the ability to sell such shares publicly, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt. Because we are able to consummate our initial business combination using our cash, debt or equity, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, since we have no specific business combination under consideration, we have not taken any steps to secure third-party financing and there can be no assurance that it will be available to us on favorable terms, or at all.

 

Business Strategy: Initial Focus on Financial Services Industry

 

We intend to focus our efforts initially on the financial services industry. We believe that the size of the financial services industry combined with the ongoing strategic activity within the industry, as reflected in the consistently high level of mergers and acquisitions, provides a compelling environment in which to initially seek our initial business combination. We will seek acquisition opportunities where we can apply our capital and our management’s and sponsor’s relationships and expertise to enhance the value of the acquired company. Attractive business combinations may exist in rapidly consolidating industry environments or in businesses that have not performed well in the past that demonstrate strong growth potential. We intend to primarily focus our search on businesses in North America and Europe.

 

The financial services industry includes entities of various types that provide a broad array of financial services to their clients. Financial services companies range from highly capital intensive businesses to transaction oriented service providers. The industry can be segmented into six primary sub-sectors which include, among others, the following types of companies:

 

 

 

 

 

 

 

The financial services industry is a large and significant industry in the context of both the equity markets and the overall economy:

 

 

 

 

 

 

Investment Criteria

 

We have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, although we may decide to enter into a business combination with a target business that does not meet all or any of these criteria and guidelines.

 

 

 

 

 

 

¹ Source: Thomson Financial. Data as of January 31, 2008.

² Source: “News Release: Gross Domestic Product and Corporate Profits: Third Quarter 2007,” Bureau of Economic Analysis, November 29, 2007.

³ Source: “Gross Domestic Product by Industry Accounts,” Bureau of Economic Analysis, April 24, 2007.

⁴ Source: “Opportunities for Private Equity in Financial Services,” Piper Jaffray & Co., Summer 2007. Refers to aggregate deal value of announced transactions.

⁵ Source: “Opportunities for Private Equity in Financial Services,” Piper Jaffray & Co., Summer 2007.

have either a leading or defensible niche market position. We will consider businesses with compelling platforms that could benefit from our industry expertise and relationship base.

 

Consummating an Initial Business Combination

 

General

 

We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We intend to utilize the net proceeds of this offering and proceeds from the sale of the private placement warrants (after offering expenses and amounts paid to holders of common stock exercising conversion rights, if any), additional issuances of our equity and/or debt financing, or a combination of these as the consideration to be paid in our initial business combination. While substantially all of the net proceeds of this offering and proceeds from the sale of the private placement warrants (after offering expenses and amounts paid to holders of common stock exercising conversion rights, if any) are allocated to consummating our initial business combination or for use as working capital or other general corporate purposes for the business post-combination, the proceeds are not otherwise designated for more specific purposes. Accordingly, prospective investors will not, at the time of their investment in us, be provided an opportunity to evaluate the specific merits or risks of one or more target businesses. If we consummate our initial business combination with a target business using additional issuances of our equity and/or debt financing as all or part of the consideration to fund the initial business combination, any funds then remaining in the trust account may be used to undertake additional acquisitions or to fund the operations of the combined business. We may enter into a business combination with a target business that does not require significant additional capital but is seeking a public trading market for its equity and which wants to merge with a company that already is public in order to avoid the uncertainties associated with undertaking its own initial public offering. These uncertainties may include time delays, compliance and governance issues, significant expense, and the risk that market conditions will not be favorable for an offering at the time the offering is ready to be sold. Alternatively, we may seek to consummate our initial business combination with a target business that is financially unstable or in the development stage. We may seek to consummate our initial business combination with more than one target business, although our limited resources may serve as a practical limitation on our ability to do so. We may also seek to consummate our initial business combination by acquiring a controlling portion of one or more businesses.

 

None of our executive officers, directors, existing holders, or other affiliates or any representatives acting on our behalf has had any contact or discussions with any prospective target business regarding our initial business combination or has taken any direct or indirect measures to locate a specific target business or consummate our initial business combination.

 

Subject to the requirement that our initial business combination must be with one or more businesses, or a portion of such business or businesses, whose fair market value, individually or collectively, is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination, we have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses. Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of any specific industry or target business with which we may ultimately consummate our initial business combination. If we combine with a financially unstable business or an entity in the development stage, including an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the business and operations of a financially unstable or development stage entity. Although our executive officers and directors will endeavor to assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter or that the price of the business combination will reflect such risks. Furthermore, some of those risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.

 

We cannot assure you that we will identify, secure a definitive agreement, or consummate our initial business combination with one or more target businesses. In addition, no financing arrangements have been entered into or are contemplated with any third parties to raise any additional funds, whether through the sale

of securities or otherwise, that we may need if we decide to consummate our initial business combination for consideration in excess of our available assets at the time of the business combination.

 

Prior to consummation of our initial business combination, we will seek to have all vendors, providers of financing, if any, prospective target businesses and other entities with whom we execute agreements subsequent to the completion of this offering, which we collectively refer to as “contracted parties,” waive any right, title, interest, or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders. However, we are not obligated to obtain a waiver from any contracted party and there is no guarantee that a contracted party will execute such an agreement nor is there any guarantee that, even if a contracted party executes such an agreement with us, it will not seek recourse against the trust account for any amounts due or that a court would not conclude that such agreement was not legally enforceable. In the event that a potential contracted party were to refuse to execute such a waiver, we will enter into a transaction or execute an agreement with that entity only if our executive officers and directors first determine that we would be unable to obtain, on a reasonable basis, substantially similar services or opportunities from another entity willing to execute such a waiver. We will seek to secure waivers that we believe are valid and enforceable, but it is possible that a waiver may later be found to be invalid or unenforceable. KBW, Inc. has agreed that it will be liable to us if and to the extent claims by third parties reduce the amounts in the trust account available for payment to our public stockholders in the event of our liquidation and the claims are made by one or more of our vendors, by a third party with which we entered into a contractual relationship following consummation of this offering or by a prospective target business. A “vendor” refers to a third party that provides goods or services to us (including any providers of financing). However, the agreement entered into by KBW, Inc. specifically provides for two exceptions to its indemnification obligations: there will be no liability (1) as to any claimed amounts owed to a third party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable), or (2) as to any claims under our indemnity to the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Furthermore, there could be claims from parties other than vendors or target businesses that would not be covered by the indemnity from KBW, Inc., such as stockholders and other claimants who are not parties in contract with us who file a claim for damages against us. We cannot assure you that KBW, Inc. will be able to satisfy its indemnification obligations. The agreements under which KBW, Inc. and the employee holders have agreed to purchase warrants in the private placement include an irrevocable waiver to any right, title, interest, or claim of any kind to monies held in the trust account.

 

Sources of Targets

 

We may identify a target business through KBW’s contacts, through our executive officers’ and directors’ current and previous business contacts or through our public relations and marketing efforts. Our executive officers and directors have collectively over 75 years of professional experience in the financial services industry. This breadth of experience, and tenure, may be a valuable basis with which to source business targets.

 

Our executive officers and directors are not required to commit a specified amount of time in identifying or performing due diligence on potential target businesses. Our executive officers and directors believe that the relationships they have developed over their careers, in combination with the possible sources discussed above, will generate a number of potential target businesses that will warrant further investigation.

 

In addition to leveraging the experience and contacts of our management, opportunities may also be presented to us by various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis, because many of these sources will have read our prospectus and know what types of businesses we are targeting.

 

We may pay fees or compensation to third parties for their efforts in introducing us to potential target businesses. Such payments are typically, although not always, calculated as a percentage of the dollar value of the transaction. We have not anticipated use of a particular percentage fee, but instead will seek to negotiate

the smallest reasonable percentage fee consistent with the attractiveness of the opportunity and the alternatives, if any, that are then available to us. We may make such payments to entities we engage for this purpose or entities that approach us on an unsolicited basis. Payment of finders’ fees is customarily tied to completion of a transaction and certainly would be tied to a completed transaction in the case of an unsolicited proposal. Although it is possible that we may pay finders’ fees in the case of an uncompleted transaction, we consider this possibility to be remote. In no event will we pay our executive officers, directors or existing holders or any entity with which they are affiliated any finder’s fee or other compensation for services rendered to us prior to or in connection with the consummation of our initial business combination other than (i) repayment of a $200,000 interest-free loan made by KBW, Inc. to us, (ii) payment to KBW, Inc. of a monthly fee of $10,000 for office space and administrative services and (iii) reimbursement of out-of-pocket expenses incurred by our executive officers, directors and employees of KBW in connection with activities on our behalf. In addition, none of our executive officers, directors or existing holders will receive any finder’s fee, consulting fees or any similar fees from any person or entity prior to or in connection with any business combination involving us other than any compensation or fees that may be received for any services provided following such business combination.

 

Selection of a Target and Structuring of an Initial Business Combination

 

Subject to the requirement that our initial business combination must be with one or more businesses, or a portion of such business or businesses, whose fair market value, individually or collectively, is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination, our executive officers and directors will have virtually unrestricted flexibility in identifying and selecting a prospective target business.

 

We have not established any other specific attributes (financial or otherwise) of prospective target businesses. In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following:

 

 

These factors are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on the above factors as well as other considerations, factors and criteria our management deems relevant to our business objective. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which will encompass, among other things, meetings with management and employees, legal and accounting due diligence, inspection of facilities and calls with vendors and customers, as well as a review of financial and other information which will be made available to us.

 

We have not, nor has anyone on our behalf, contacted or been contacted by any potential target business or had any substantive discussions, formal or otherwise, with respect to a business combination. Additionally, we have not, nor have we engaged or retained any agent, to conduct any research or take any steps to identify, locate or contact any suitable acquisition candidate.

 

The time required to select and evaluate a target business and to structure and consummate the initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately consummated will result in our incurring losses and will reduce the funds we can use to consummate another business combination.

 

Fair Market Value of Target Business or Businesses

 

Our initial business combination must be with one or more target businesses, or a portion of such business or businesses, having a fair market value, individually or collectively, that is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination. In the event we structure our initial business combination to acquire only a portion (less than 100%) of the equity interests of the target business, we do not intend to acquire less than a controlling interest, which would be greater than 50% of the voting power of the outstanding voting securities of the target business. If we acquire only a controlling interest in a target business or businesses, the portion of such business or businesses that we acquire must have a fair market value, individually or collectively, equal to at least 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of the acquisition. We do not intend to become a holding company for a minority interest in a target business in our initial business combination. Accordingly, prior to 24 months following the completion of this offering, we will seek to consummate our initial business combination with a business or businesses, or portions thereof, whose fair market value is equal to at least approximately $189,630,348, assuming no exercise of the underwriters’ over-allotment option. The actual amount of the consideration which we will be able to pay for the initial business combination will depend on whether we choose, or are able, to pay a portion of the initial business combination consideration with shares of our common stock or if we are able to finance a portion of the consideration with debt or other equity financing and the number of shares of our common stock that are converted into a pro rata shares of the amount then on deposit in the trust account as described below under “— Conversion Rights.” If we choose to consummate our initial business combination through a share-for-share exchange or to finance all or a portion of our initial business combination consideration by issuing additional shares of our common stock, such additional equity may be issued at a price below the then-current trading price for shares of our common stock, resulting in dilution of the equity interest of our then-current public stockholders. No financing arrangements have been entered into or are contemplated with any parties to raise any additional funds, whether through the sale of securities or otherwise, that we may need to consummate our initial business combination for consideration in excess of our available assets at the time of such consummation.

 

In contrast to other companies with business plans similar to ours where the minimum fair market value of the target businesses for the initial business combination is based on 80% of the acquiror’s net assets, our minimum fair market value is based on 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination. We have used this criterion to provide investors and our management team with greater certainty as to the fair market value that a target business or businesses must have in order to qualify for a business combination with us. The determination of net assets requires an acquiror to have deducted all liabilities from total assets to arrive at the

balance of net assets. Given the on-going nature of legal, accounting, stockholder meeting and other expenses that will be incurred immediately before and at the time of a business combination, the balance of an acquiror’s total liabilities may be difficult to ascertain at a particular point in time with a high degree of certainty. Accordingly, we have determined to use the valuation threshold of 80% of the balance in the trust account (less deferred underwriting discounts and commissions and taxes payable) for the minimum fair market value of the target business or businesses with which we may combine so that our management team will have greater certainty when selecting, and our investors will have greater certainty when voting to approve or disapprove a proposed combination with, a target business or businesses that will meet the minimum valuation criterion for our initial business combination.

 

The fair market value of a target business or businesses will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, the values of comparable businesses, earnings and cash flows and book value and will include any debt of the target business or businesses that we assume, repay or refinance in connection with our initial business combination. Our executive officers and directors will consult with and engage such experts as they deem necessary and useful to evaluate the fair market value of the target business. Our board of directors will determine the fair market value of a target and whether a proposed business combination is in the best interests of the stockholders and, in making that determination, will do so in accordance with the requirements of the Delaware General Corporation Law and consistent with their fiduciary obligations in the context of a business combination. We will not be required to obtain an opinion from an investment banking firm as to the fair market value of the target if our board of directors independently determines that the target meets the threshold criterion unless one of our executive officers or directors or KBW is affiliated with a target business. If our board of directors is not able to independently determine that the target has a sufficient fair market value to meet the threshold criterion or one of our executive officers or directors or KBW is affiliated with that target, we will obtain an opinion from an unaffiliated, independent investment banking firm which is a member of FINRA with respect to the fair market value of that target. Any such opinion will be included in our proxy soliciting materials furnished to our stockholders in connection with our initial business combination. Investment banking firms providing fairness opinions typically place limitations on the purposes for which the opinion may be used, and there can be no assurances that, as a result of such limitations or applicable law, stockholders will be entitled to rely on the opinion. We expect to require that any firm selected by us to provide a fairness opinion will adhere to general industry practice in stating the purposes for which its opinion may be used. We will not be required to obtain an opinion from an investment banking firm as to the fair market value of the business if (i) our board of directors independently determines that the target has sufficient fair market value to meet the threshold criterion and (ii) none of our executive officers, directors and KBW is affiliated with that target. If no opinion is obtained or if stockholders are not permitted to rely on the opinion, our stockholders will be relying solely on the judgment of our board of directors with respect to the determination of the fair market value of our initial business combination.

 

Issuance of Additional Debt or Equity

 

Depending on the valuation size of our target businesses, we may need to raise additional equity and/or debt financing to consummate our initial business combination. The mix of equity or debt would be dependent on the nature of the potential target business, including its historical and projected cash flow and its projected capital needs. It would also depend on general market conditions at the time, including prevailing interest rates and debt-to-equity coverage ratios. For example, capital intensive businesses usually require more equity and mature businesses with steady historical cash flow may sustain higher debt levels than growth companies.

 

We believe that it is typical for private equity firms and other financial buyers to use leverage to acquire businesses. Such debt is often in the form of both senior secured debt as well as subordinated debt, which may be available from a variety of sources. Banks and other financial institutions may provide senior or senior secured debt based on the target’s cash flows. Mezzanine debt funds or similar investment vehicles may provide additional funding on a basis that is subordinate to the senior or secured lenders. Such instruments typically carry higher interest rates and are often accompanied by additional equity, such as warrants. We cannot assure you that such financing would be available on favorable terms, or at all. The proposed funding

for our initial business combination would be disclosed in the proxy statement relating to the required shareholder approval.

 

Lack of Business Diversification

 

Our initial business combination must be with one or more target businesses, or a portion of such business or businesses, whose fair market value, individually or collectively, is at least equal to 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and taxes payable) at the time of such business combination. We expect to consummate only a single business combination, although to satisfy the 80% test, we may need to consummate a simultaneous combination with more than one business at the same time. At the time of our initial business combination, we may not be able to acquire more than one target business because of various factors, including complex accounting or financial reporting issues. For example, in the proxy soliciting materials we distribute to our stockholders in connection with our initial business combination, we may need to present pro forma financial statements reflecting the operations of several target businesses as if they had been combined historically. Consummating our initial business combination through more than one acquisition would likely result in increased costs as we would be required to conduct a due diligence investigation of more than one business and negotiate the terms of the acquisition with multiple sellers. A simultaneous combination with several target businesses also presents logistical issues such as the need to coordinate the timing of negotiations, proxy statement disclosure and closings. Our attempt to consummate our initial business combination in this manner would increase the chance that we would be unable to successfully consummate our initial business combination in a timely manner. In addition, if conditions to closings with respect to one or more of the target businesses are not satisfied, the fair market value of the business could fall below the required fair market value threshold of 80% of the balance in the trust account (less the deferred underwriting discounts and commissions and after taxes payable). Furthermore, the success of a business formed through the combination of smaller businesses will depend on our ability to integrate disparate organizations and achieve expected synergies. See “Risk Factors — Risks Relating to the Company and the Offering — Any attempt to consummate more than one transaction as our initial business combination will make it more difficult to consummate our initial business combination.”

 

Accordingly, while it is possible that we may attempt to consummate our initial business combination with more than one target business, we are more likely to choose a single target business if all other factors appear equal. This means that for an indefinite period of time, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to consummate business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By consummating a business combination with only a single entity, our lack of diversification may:

 

 

If we consummate our initial business combination structured as a merger in which the consideration is our stock, we would have a significant amount of cash available to make add-on acquisitions or to fund the operations of the combined business following our initial business combination. See “Risk Factors — Risks Relating to the Company and the Offering — We may only be able to consummate one business combination, which may cause us to be solely dependent on a single business and a limited number of services or products.”

 

Limited Ability to Assess the Target’s Management

 

Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of consummating our initial business combination, we cannot assure you that our

assessment of the target’s management will prove to be correct. In addition, we cannot assure you that the future management will have the necessary skills, qualifications, or abilities to manage a public company. Furthermore, the future role of our executive officers and directors, if any, in the target business cannot presently be stated with any certainty. Moreover, our current executive officers and directors will only be able to remain with us after the consummation of our initial business combination if they are able to negotiate the same in connection with any such combination. While it is possible that one or more of our executive officers and directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that our executive officers and directors will have significant experience or knowledge relating to the operations of the particular target business.

 

Following our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional personnel or that such personnel will have the requisite skills, knowledge, or experience necessary to enhance the incumbent management. Although our current executive officers and directors may remain actively involved in our business after consummation of our initial business combination, our executive officers only will be able to remain with us if they are able to negotiate mutually agreeable employment terms as a part of any such combination, which terms would be disclosed to our stockholders in any proxy statement relating to such transaction. If our current executive officers and directors choose to remain with us after our initial business combination, they will negotiate the terms of the initial business combination as well as the terms of their employment arrangements, and may have a conflict of interest in negotiating the terms of the initial business combination while, at the same time, negotiating terms of their employment arrangements.

 

Stockholder Approval of Our Initial Business Combination

 

Prior to the consummation of our initial business combination, we will submit the proposed transaction to our stockholders for approval, even if the nature of the acquisition is such as would not ordinarily require stockholder approval under Delaware law. The quorum required to constitute this meeting, as for all meetings of our stockholders in accordance with our by-laws, is a majority of our issued and outstanding common stock (whether or not held by our public stockholders). The AMEX recommends that stockholders receive notice of any stockholder meeting a minimum of 20 days prior to the meeting. Therefore, if shares of our common stock are listed on AMEX, we will mail the notice at least 23 days prior to the meeting date to allow time for mailing. If shares of our common stock are not listed on AMEX, we will abide by our by-laws and Delaware law, which require us to provide at least ten days’ written notice, measured from the certification date of the mailing, before the date of any stockholders meeting. We will conduct any vote on our initial business combination, whether by a stockholder meeting or written consent, in accordance with the SEC’s proxy rules and the requirements of our certificate of incorporation and by-laws. In addition, even if our stockholders vote in favor of a business combination, under the terms of our certificate of incorporation, we will not consummate a business combination if public stockholders owning 30% or more of the shares of our common stock that are included in the units being sold in this offering both vote against the business combination and exercise their conversion rights. See “— Conversion Rights.” If a majority of the shares of common stock voted by the public stockholders are not voted in favor of a proposed initial business combination or if a majority of all our outstanding shares of common stock are not voted in favor of an amendment to our certificate of incorporation to provide for our perpetual existence, we will not proceed with such proposed business combination, but we may continue to seek other target businesses with which to consummate our initial business combination that meet the criteria set forth in this prospectus until the expiration of 24 months from completion of this offering. In connection with seeking stockholder approval of our initial business combination, we will furnish our stockholders with proxy soliciting materials prepared in accordance with the Exchange Act, which, among other matters, will include a description of the operations of the target business and audited historical financial statements of the target business based on United States generally accepted accounting principles.

 

In connection with the vote required for any business combination, our existing holders have agreed to vote their initial shares in the same manner that the majority of the shares of common stock offered hereby are voted by our public stockholders (excluding our executive officers, directors and existing holders with respect

to any units they purchase in this offering or units or shares of common stock included in such units that they purchase in the secondary market) in the votes required to approve our initial business combination and the amendment to our certificate of incorporation to provide for our perpetual existence. Our existing holders have also agreed that they will not be entitled to conversion rights with respect to those shares. In addition, our executive officers, directors and existing holders have agreed that they will vote any shares that they purchase in the open market in or following the completion of this offering in favor of our initial business combination and the amendment to our certificate of incorporation to provide for our perpetual existence. As a result, an executive officer, director or existing holder who acquires shares prior to, in or following the completion of this offering will not be entitled to conversion rights for those shares if our initial business combination is approved by our public stockholders. We will proceed with the initial business combination only if (i) a majority of the shares of our common stock voted by the public stockholders are voted in favor of the initial business combination, (ii) public stockholders owning up to one share less than 30% of the shares of our common stock included in the units being sold in this offering both vote against the proposed business combination and exercise their conversion rights and (iii) a majority of all of our outstanding shares of common stock are voted in favor of an amendment to our certificate of incorporation to provide for our perpetual existence. Voting against the initial business combination alone will not result in conversion of a public stockholder’s shares into a pro rata share of the trust account. To do so, a public stockholder must have also exercised the conversion rights described below.

 

After the consummation of our initial business combination, unless required by applicable Delaware law, the federal securities laws, and the rules and regulations promulgated thereunder, or the rules and regulations of an exchange upon which our securities are listed, we do not presently intend to seek stockholder approval for any subsequent acquisitions.

 

Conversion Rights

 

At the time we seek stockholder approval of our initial business combination, we will offer each public stockholder the right to elect to have such stockholder’s shares of common stock converted to cash if the stockholder votes against the initial business combination and the initial business combination is approved and consummated provided that a public stockholder, together with any affiliate or any other person with whom he, she or it is acting in concert or as a “group” (within the meaning of section 13(d)(3) of the Exchange Act), will be restricted from seeking conversion rights with respect to more than 10% of the shares of common stock included in the units being sold in this offering. Such a public stockholder would still be entitled to vote against a proposed business combination with respect to all shares owned by him, her or it. We believe this restriction will prevent public stockholders from accumulating large blocks of stock before the vote held to approve a proposed business combination and attempting to use their conversion rights as a means to force us or our management to purchase their stock at a significant premium to the then-current market price. Absent this provision, for example, a public stockholder who owns 15% of the shares of common stock included in the units being sold in this offering could threaten to vote against a proposed business combination and seek conversion, regardless of the merits of the transaction, if the shares are not purchased by us or our management at a premium to the then-current market price. By limiting each public stockholder’s ability to convert only up to 10% of the shares of common stock included in the units being sold in this offering, we believe we have limited the ability of a small group of public stockholders to unreasonably attempt to block a transaction which is favored by our other public stockholders. However, as previously stated, we are not restricting the public stockholders’ ability to vote any or all of their shares against the proposed business combination.

 

The actual per share conversion price will be equal to the aggregate amount then on deposit in the trust account (including the amount representing the deferred portion of the underwriting discounts and commissions), including any interest income earned thereon (after taxes payable on such interest income and after release of up to $3,250,000, subject to adjustment, of interest income earned, after taxes payable, to fund working capital requirements), as of two business days prior to the consummation of the initial business combination, divided by the number of shares of common stock included in the units being sold in this offering. Assuming no exercise of the underwriters’ over-allotment option, the initial per share conversion

price would be approximately $9.83 before interest, or approximately $0.17 less than the per unit offering price of $10.00.

 

An eligible stockholder may request conversion at any time after the mailing to our stockholders of the proxy statement and no later than the business day immediately preceding the vote taken with respect to a proposed business combination at a meeting held for that purpose, but the request will not be granted unless the stockholder votes against the initial business combination and the initial business combination is approved and consummated. In addition, at our option, we may require that, no later than the business day immediately preceding the vote on the business combination, the eligible stockholder must present written instructions to our transfer agent stating that the stockholder wishes to convert the shares of our common stock held by such stockholder into a pro rata share of the trust account and confirming that the stockholder has held these shares since the record date for the stockholder meeting and will continue to hold them through the stockholder meeting and the closing of our initial business combination. We may also require eligible stockholders to tender their certificates to our transfer agent or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System no later than the business day immediately preceding the vote on the business combination. The proxy soliciting materials that we will furnish to stockholders in connection with the vote for any proposed initial business combination will indicate whether we are requiring stockholders to satisfy such certification and delivery requirements. Traditionally, in contrast to the requirement for physical or electronic delivery of shares of common stock prior to the stockholder meeting, in order to perfect conversion rights in connection with a blank check company’s initial business combination, a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his, her or its conversion rights. If the business combination was approved, the company would contact such stockholder to arrange for delivery of his, her or its stock certificate to verify ownership. As a result, the stockholder had, in effect, an “option window” after the approval of the business combination during which the stockholder could monitor the price of the Company’s common stock in the market. If the price rose above the conversion value, the stockholder could sell his, her or its shares in the open market instead of actually delivering shares to the company for cancellation in consideration for the conversion value. Thus, the company would not have any ability to enforce the exercise of conversion rights effected at the time the business combination was approved, and the conversion rights would eventually be continuing rights surviving beyond the approval of the business combination until the converting holder delivered the stock certificate for conversion at the conversion value. The requirement for physical or electronic delivery of shares of common stock prior to the stockholder meeting serves two purposes. First, it ensures that a stockholder’s election to exercise his, her or its conversion rights is irrevocable once the business combination is approved. Second, it ensures that we know the amount of proceeds that we will be able to use to consummate the business combination prior to the consummation of the business combination.

 

The proxy soliciting materials that we will furnish to stockholders in connection with the vote for any proposed business combination will indicate whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, stockholders will have from the time we send out our proxy statement up until the business day immediately preceding the vote on the business combination to deliver their shares if they elect to exercise their conversion rights. This time period varies depending on the specific facts of each transaction. However, because the delivery process is within the stockholder’s control and, so long as the stockholder holds the securities in “street name” through a broker-dealer (rather than holding physical certificates registered in the stockholder’s name) and delivers those securities electronically, we believe that delivery can usually be accomplished by the stockholder in a relatively short time period simply by contacting the transfer agent or tendering broker and requesting delivery of the shares through the DWAC System and that this time period is sufficient for investors generally. However, because we do not have any control over the delivery process, it may take significantly longer than we anticipate and stockholders may not be able to exercise their conversion rights in time. In particular, delivery of physical certificates usually takes considerably longer than electronic delivery. Accordingly, we will only require stockholders to deliver their certificates prior to the vote if, in accordance with the AMEX’s proxy notification recommendations, the stockholders receive the proxy soliciting materials at least 20 days prior to the meeting.

In the event a stockholder tenders his shares and decides no later than the business day immediately preceding the stockholder meeting that he does not want to convert his shares, the stockholder may withdraw the tender. In the event that a stockholder tenders shares and our initial business combination is not completed, these shares will not be converted into cash and the physical certificates representing these shares will be returned to the stockholder.

 

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker approximately $35 and it would be up to the broker whether or not to pass this cost on to the converting holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights to tender their shares no later than the business day immediately preceding the stockholder meeting as the need to deliver shares is a requirement of conversion regardless of the timing of when such delivery must be effectuated. Accordingly, this would not result in any increased cost to stockholders when compared to the traditional process.

 

The steps outlined above will make it more difficult for our stockholders to exercise their conversion rights. In the event that it takes longer than anticipated to obtain a physical certificate, public stockholders who wish to convert may be unable to obtain physical certificates by the deadline for exercising their conversion rights and thus will be unable to convert their shares. If a stockholder votes against the initial business combination but fails to properly exercise his conversion rights, such stockholder will not have his shares of common stock converted to a pro rata distribution of the trust account. Any request for conversion, once made, may be withdrawn at any time up to the date of the meeting. It is anticipated that the funds to be distributed to stockholders who properly elect conversion will be distributed promptly after consummation of our initial business combination. Public stockholders who convert their shares of our common stock into their share of the trust account will still have the right to exercise any warrants that they received as part of the units. We will not consummate our proposed initial business combination if public stockholders owning 30% or more of the shares of common stock included in the units being sold in this offering both vote against the business combination and exercise their conversion rights. We will not propose to our stockholders any transaction that is conditioned on the exercise of conversion rights by holders owning one share less than 30% of the shares of common stock included in the units being sold in this offering.

 

If a vote on our initial business combination is held and the business combination is not approved, we may continue to try to consummate a business combination with a different target business until 24 months from the completion of this offering. If our initial business combination is not approved or consummated for any reason within the required 24-month period, then public stockholders voting against our initial business combination who exercised their conversion rights would not be entitled to convert their shares of common stock for a pro rata share of the aggregate amount then on deposit in the trust account. In such a case, if we have required public stockholders to tender their shares prior to the stockholders’ meeting, we will promptly return such shares to the tendering public stockholder. Public stockholders would be entitled to receive their pro rata share of the aggregate amount on deposit in the trust account only in the event that (i) they vote against the initial business combination and exercise their conversion rights and the initial business combination they voted against was duly approved and subsequently consummated, or (ii) in connection with our liquidation (and after payment of or provision for our then existing and future estimated liabilities), whether or not they have previously delivered their shares for conversion without any further action on their part.

 

We will not consummate our proposed initial business combination if public stockholders owning 30% or more of the shares that are included in the units being sold in this offering both vote against the proposed initial business combination and exercise their conversion rights. We intend to structure and consummate any potential business combination in a manner such that public stockholders holding in the aggregate up to one share less than 30% of the shares of common stock included in the units being sold in this offering voting against our initial business combination could convert their shares of common stock into a pro rata share of the aggregate amount then on deposit in the trust account, and the business combination could still go forward. As a result, we will be able to consummate a business combination even in the face of strong stockholder dissent. Furthermore, the ability to consummate a transaction despite stockholder disapproval in

excess of what would be permissible in a traditional blank check offering may be viewed negatively by potential investors seeking stockholder protections consistent with other similar offerings. However, we believe the benefit of approving a transaction with a large majority outweighs these potential negatives.

 

Assuming no exercise of the underwriters’ over-allotment option, the initial conversion price will be approximately $9.83 per share. As this amount is lower than the $10.00 per unit offering price and it may be less than the market price of the common stock on the date of conversion, there may be a disincentive on the part of public stockholders to exercise their conversion rights.

 

Liquidation if No Business Combination

 

Our certificate of incorporation provides that we will continue in existence only until          , 2010. This provision may not be amended except in connection with the consummation of our initial business combination. If we have not completed a business combination by such date, our corporate existence will cease except for the purposes of liquidating and winding up our affairs pursuant to Section 278 of the Delaware General Corporation Law. This has the same effect as if our board of directors and stockholders had formally voted to approve our dissolution pursuant to Section 275 of the Delaware General Corporation Law. Accordingly, limiting our corporate existence to a specified date as permitted by Section 102(b)(5) of the Delaware General Corporation Law removes the necessity to comply with the formal procedures set forth in Section 275 (which would have required our board of directors and stockholders to formally vote to approve our liquidation and to have filed a certificate of dissolution with the Delaware Secretary of State). Instead, we will notify the Delaware Secretary of State in writing on the termination date that our corporate existence has ended, with any franchise tax due or assessable by the State of Delaware. We view this provision terminating our corporate life by          , 2010 as an obligation to our stockholders, and our executive officers and directors have agreed that they will not take any action to amend or waive this provision to allow us to survive for a longer period of time except in connection with the consummation of our initial business combination.

 

If we are unable to complete our initial business combination within 24 months after the completion of this offering, as soon as practicable thereafter, we will adopt a plan of distribution in accordance with Section 281(b) of the Delaware General Corporation Law. Section 278 provides that our existence will continue for at least three years (or such longer period as the Delaware Court of Chancery shall in its discretion direct) after our expiration for the purpose of prosecuting and defending suits, whether civil, criminal or administrative, by or against us, and of enabling us gradually to settle and close our business, to dispose of and convey our property, to discharge our liabilities and to distribute to our stockholders any remaining assets, but not for the purpose of continuing the business for which we were organized. Our existence will continue automatically even beyond the three-year period for the purpose of completing the prosecution or defense of suits begun prior to the expiration of the three-year period, until such time as any judgments, orders or decrees resulting from such suits are fully executed. Section 281(b) will require us to pay or make reasonable provision for all then-existing claims and obligations, including all contingent, conditional, or unmatured contractual claims known to us, and to make such provision as will be reasonably likely to be sufficient to provide compensation for any then-pending claims and for claims that have not been made known to us or that have not arisen but that, based on facts known to us at the time, are likely to arise or to become known to us within 10 years after such date. Payment or reasonable provision for payment of claims will be made in the discretion of the board of directors based on the nature of the claim and other factors deemed relevant by the board of directors. Claims may be satisfied by direct negotiation and payment, purchase of insurance to cover the claim(s), setting aside money as a reserve for future claims, or otherwise as determined by the board of directors in its discretion. Under Section 281(b), the plan of distribution must provide for all of such claims to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. If there are insufficient assets, the plan must provide that such claims and obligations be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent of legally available assets. Any remaining assets will be available for distribution to our stockholders. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors and service providers (such as accountants, lawyers, investment bankers, etc.) and potential target businesses. We will seek to have all vendors, providers of financing, if any, prospective target businesses and

any other entities with whom we execute agreements waive any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, we cannot assure you of this fact as there is no guarantee that such vendors, providers of financing, prospective target businesses and other entities will execute such agreements, nor is there any guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. A court could also conclude that such agreements are not legally enforceable. As a result , if we liquidate, the per share distribution from the trust account could be less than approximately $9.83 (or approximately $9.81 if the underwriters’ over-allotment option is exercised in full) due to claims or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective shares of our common stock, an aggregate sum equal to the amount in the trust account, inclusive of any interest income, plus any remaining net assets (subject to our obligations under Delaware law to provide for claims of creditors as described below).

 

We will notify the trustee of the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than 10 business days to effectuate such distribution. Our existing holders have waived their rights to participate in any liquidating distribution with respect to their initial shares. There will be no distribution from the trust account with respect to the initial warrants, the private placement warrants and the warrants included in the units being sold in this offering, which will expire worthless.

 

We will pay the costs of liquidation from our remaining assets outside of the trust account, including from amounts earned from interest income. If such funds are insufficient, KBW, Inc. has agreed to provide us with the funds necessary to complete our liquidation (currently anticipated not to exceed $125,000).

 

If we were unable to consummate our initial business combination and have expended all of the net proceeds of this offering and the proceeds from the sale of the private placement warrants, other than the proceeds deposited in the trust account, and without taking into account interest income, if any, earned on the trust account, the per share liquidation price (assuming no exercise of the underwriters’ over-allotment option) would be approximately $9.83, or approximately $0.17 less than the per unit offering price of $10.00, plus interest (but less taxes payable on such interest income and less up to $3,250,000, subject to adjustment, of interest income, after taxes payable that may be released to us to fund working capital requirements). The proceeds deposited in the trust account could, however, become subject to the claims of our creditors, which will be prior to the claims of our public stockholders. If we are unable to consummate our initial business combination and are required to liquidate, KBW, Inc. has agreed that it will be liable to us if and to the extent claims by third parties reduce the amounts in the trust account available for payment to our public stockholders in the event of our liquidation and the claims are made by one or more of our vendors, by a third party with which we entered into a contractual relationship following consummation of this offering or by a prospective target business. A “vendor” refers to a third party that provides goods or services to us (including any providers of financing). However, the agreement entered into by KBW, Inc. specifically provides for two exceptions to its indemnification obligations: there will be no liability (1) as to any claimed amounts owed to a third party who executed a waiver (even if such waiver is subsequently found to be invalid and unenforceable), or (2) as to any claims under our indemnity to the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Furthermore, there could be claims from parties other than vendors or target businesses that would not be covered by the indemnity from KBW, Inc., such as stockholders and other claimants who are not parties in contract with us who file a claim for damages against us. Based on representations made to us by KBW, Inc., we believe that it is capable of funding a shortfall in our trust account to satisfy its foreseeable indemnification obligations. However, we have not asked them to reserve for such an eventuality. We cannot assure you that KBW, Inc. will be able to satisfy its indemnification obligations or that the proceeds in the trust account will not be reduced by such claims. In the event that the proceeds in the trust account are reduced and KBW, Inc. asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether we would take legal action against KBW, Inc. to enforce its indemnification obligations.

While we currently expect that our independent directors would take action on our behalf against KBW, Inc. to enforce its indemnification obligations, it is possible that our independent directors in exercising their business judgment may choose not to do so in a particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual per share liquidation price will not be less than approximately $9.83 (assuming no exercise of the underwriters’ over-allotment option).

 

Furthermore, creditors may seek to interfere with the distribution of the trust account pursuant to federal or state creditor and bankruptcy laws which could delay the actual distribution of such funds or reduce the amount ultimately available for distribution to our public stockholders. If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the funds held in our trust account will be subject to applicable bankruptcy law and may be included in our bankruptcy estate and subject to claims of third parties with priority over the claims of our public stockholders. To the extent bankruptcy claims deplete the trust account, we cannot assure you we will be able to make liquidating distributions to our public stockholders that they might otherwise receive.

 

We expect that our total costs and expenses associated with the implementing and completing our liquidation will not exceed $125,000. This amount includes all costs and expenses related to our winding-up and liquidation. We believe that there should be sufficient funds available to us as working capital to fund the liquidation expenses from the proceeds not held in the trust account, plus interest income earned, after taxes payable, on the trust account, although we cannot give you any assurance that such funds will, in fact, be sufficient for such purposes.

 

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after          , 2010, 24 months from the completion of this offering, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our directors may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing themselves and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

 

Our public stockholders will be entitled to receive funds from the trust account only in the event of the expiration of our corporate existence and liquidation or if the stockholders seek to convert their respective shares of common stock into cash upon a business combination which the stockholder voted against and which is actually consummated by us. In no other circumstances shall a public stockholder have any right or interest of any kind to or in the trust account.

 

Conflicts of Interest

 

KBW undertakes a wide range of financial advisory, investment banking, asset management and other activities for a variety of clients, including institutions, companies and individuals, and for its own account. Accordingly, there may be situations in which KBW has an obligation or an interest that actually or potentially conflicts with our interests. These conflicts may not be resolved in our favor and, as a result, we may be denied certain acquisition opportunities or may be otherwise disadvantaged in some situations by our relationship to KBW.

 

For a more detailed discussion of conflicts of interest, please see the section entitled “Management — Conflicts of Interest.”

 

Certificate of Incorporation

 

Our certificate of incorporation requires that we obtain unanimous consent of our stockholders to amend certain provisions of our certificate of incorporation. However, the validity of unanimous consent provisions under Delaware law has not been settled. A court could conclude that the unanimous consent requirement

constitutes a practical prohibition on amendment in violation of the stockholders’ implicit rights to amend the corporate charter. In that case, certain provisions of our certificate of incorporation would be amendable without unanimous consent and any such amendment could reduce or eliminate the protection afforded to our stockholders. However, we view the foregoing provisions as obligations to our stockholders, and we will not take any action to waive or amend any of those provisions.

 

Neither we nor our board of directors will propose any amendment to those provisions, or support, endorse or recommend any proposal that stockholders amend any of those provisions at any time prior to the consummation of our initial business combination (subject to any fiduciary duty our executive officers or directors may have). In addition, we believe we have an obligation in every case to structure our initial business combination so that up to 30% of the shares of common stock (minus one share) included in the units being sold in this offering have the ability to be converted to cash by public stockholders exercising their conversion rights (subject to the limitations described under “— Conversion Rights”) and that, despite such conversions, the business combination may still proceed.

 

Pursuant to our certificate of incorporation, our corporate existence will cease 24 months after the completion of this offering except for the purposes of winding up our affairs and we will liquidate. However, if we consummate our initial business combination within this time period, in connection with the stockholder vote to approve our initial business combination, we will ask our stockholders to amend this provision to allow for our perpetual existence following such business combination.

 

Competition

 

In identifying, evaluating, and selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours including other blank check companies, private equity groups and leveraged buyout funds, and businesses seeking acquisitions. Many of these entities are well established and have extensive experience identifying and consummating business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. While we believe there are numerous potential target businesses with which we could combine, our ability to acquire larger target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing a business combination with certain target businesses. In addition:

 

 

 

 

 

 

Any of these factors may place us at a competitive disadvantage in successfully negotiating our initial business combination. Our executive officers and directors believe, however, that a privately held target business may view our status as a well-financed public entity as offering advantages over other entities that have a business objective similar to ours.

 

Facilities

 

We currently maintain our executive offices at 787 Seventh Avenue, 6th Floor, New York, New York 10019. The cost for this space is included in the $10,000 per month fee. KBW, Inc. will charge us for general and administrative services commencing on the effective date of this offering pursuant to a services agreement. The agreement provides for a term of up to two years, commencing on the effective date of this offering, until the earlier of the consummation of our initial business combination or our liquidation. We believe that based on rents and fees for similar services in the City of New York, the fee which will be charged by KBW, Inc. is at least as favorable as we could have obtained from an unaffiliated party. We consider our existing office space adequate for our current operations.

 

Employees

 

We currently have two executive officers. Although none of our executive officers are obligated to contribute any specific number of hours per week to our business, following this offering, we anticipate that our executive officers will devote a portion of their working time to our business. As noted earlier, each of our executive officers is affiliated with KBW, Inc., and the amount of time each of them will devote to us in any time period will vary based on the availability of suitable target businesses to investigate, the course of negotiations with target businesses, and the due diligence preceding and accompanying a possible business combination. We do not intend to have any employees prior to the consummation of our initial business combination.

 

Periodic Reporting and Financial Information

 

We have registered the units being sold in this offering under the Exchange Act and after this offering will have public reporting obligations, including the filing of annual and quarterly reports with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain financial statements audited and reported on by our independent registered public accounting firm and our quarterly reports will contain unaudited financial statements.

 

We will not acquire our initial target business if we cannot obtain current audited financial statements based on United States generally accepted accounting principles for such target business. We will provide these financial statements in the proxy soliciting materials sent to stockholders for the purpose of seeking stockholder approval of our initial business combination. Our executive officers and directors believe that the need for target businesses to have, or be able to obtain, three years of audited financial statements may limit the pool of potential target businesses available for our initial business combination.

 

We will be required to comply with the internal control over financial reporting requirement of the Sarbanes-Oxley Act for the fiscal year ending November 30, 2009. A target business may not have adequate internal control over financial reporting to allow us to comply with our Sarbanes-Oxley Act requirements. The process to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete our initial business combination. Furthermore, weak internal controls of a target business may affect the reliability of our financial statements and our ability to meet our reporting obligations, which could materially and adversely affect us.

 

Legal Proceedings

 

To the knowledge of management, there is no litigation currently pending or contemplated against us or any of our executive officers or directors.

Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419

 

The following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds, underwriting discounts, and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriters will not exercise their over-allotment option. None of the provisions of Rule 419 apply to our offering.